Retail Channel $ Update – April Monthly & May Advance

In May, Commodities deflation slowed to -0.1% from -0.2% and Total Retail sales were +3.1% vs 24, -34.4% below their average May Lift. The Relevant Retail CPI rose to 0.8% from 0.6% and sales were +3.9% vs 24, -17.4% below average. There are other factors currently impacting sales, including high cumulative inflation and pre-tarifflation binge buying. The situation is complex, but in regard to drops and the size of YOY sales lifts, May was worse than April.

We’ll continue to track the retail market with data from 2 reports provided by the Census Bureau and factor in a targeted CPI. The reports are the Monthly and the Advance Retail Sales Reports. Both are derived from sales data gathered from retailers across the U.S. and are published monthly at the same time. The Advance Report has a smaller sample size so it can be published quickly – about 2 weeks after month end. The Monthly Report includes data from all respondents, so it takes longer to compile the data – about 6 weeks. Although the sample size for the Advance report is smaller, the results over the years have proven it to be statistically accurate with the Monthly reports. The biggest difference is that the full sample in the Monthly report allows us to “drill” a little deeper into the retail channels.

We will begin with the April Monthly Report and then go to the May Advance Report. Our focus is comparing to last year but also 21 & 19. We’ll show both actual and the “real” change in sales as we factor inflation into the data.

Both reports include the following:

• Total Retail, Restaurants, Auto, Gas Stations and Relevant Retail (removing Restaurants, Auto and Gas)
• Individual Channel Data – This is more detailed in the Monthly reports, and we’ll focus on Pet Relevant Channels.

The data will be presented in detailed charts to facilitate visual comparison between groups/channels. The charts will show 11 separate measurements. To save space they will be displayed in a stacked bar format for the channel charts.

• Current Month change – % & $ vs previous month
• Current Month change – % & $ vs same month last year and vs 2021.
  • Current Month Real change vs last year and vs 2021 – % factoring in inflation
• Current Ytd change – % & $ for this year vs last year, 2021 & 2019.
  • Current Ytd Real change % for this year vs last year and vs 2021 and 2019
• Monthly & Ytd $ & CPIs for this year vs last year and vs 2021 which are targeted by channel will also be shown. (CPI Details are at the end of the report)

First, the April Monthly. Only 2 groups were up from March but there were only 2 actual YOY sales drops, Gas Stations vs 24. Note: They are still selling less product than in 21 & 19. 3 groups are “all positive”, the same as March. Relevant Retail has been all positive in 13 of the last 17 months and in 9 of the last 11. ($ are Not Seasonally Adjusted)

The April Monthly is only $0.5B less than the Advance report. Restaurants: -$0.8B; Auto: -$0.5B; Gas Stations: No Chg; Relevant Retail: +0.9B. Only Gas Stations & Relevant Retail were up from March. A Mar>Apr increase in Total Retail  has only happened 5 times since 1992. However, the -0.7% drop was 63.6% less than the -1.8% average. There were only 2 YOY drops in actual sales, the same as March. There were only 4 “real” sales drops (5 in Mar) and like March, 3 groups were “all positive” (None in Feb). Restaurants still have the biggest increases vs 21 & 19 but Relevant Retail stayed at the top of “real” performance vs 2019. However, only 54% of their growth is real.

Now, let’s see how some Key Pet Relevant channels did in April (83% of Apr Ytd Rel Retl $)

Overall– 7 of 11 were up from March. Vs Apr 24, 8 were actually and 8 “really” up. Vs Apr 21, 6 were up but only 4 were real increases. Vs 2019, The only negatives were Off/Gift/Souv & Dept Strs. Both were actually & really down.

• Building Material Stores – The pandemic focus on home has produced sales growth of 32.6% since 2019. Prices for the Bldg/Matl group have inflated 18.9% from 21 and 22.1% from 2019 which is having an impact. Sales vs March were +12.5% for HomeCtr/Hdwe and +17.5% for Farm Stores. Vs other years, actual $ are down monthly & Ytd vs 21 for both & Ytd vs 24 for Home/Hdw. In Real $, both are down vs 21 and Home/Hdw is down vs 24. Plus, only 23% of the Bldg Materials group’s 19>25 lift was real. Avg 19>25 Growth: HomeCtr/Hdwe: 4.2%, Real: 0.8%; Farm: 6.0%, Real: 2.5%
• Food & Drug – Both are truly essential. Except for the pandemic food binge buying, they tend to have smaller changes in $. In terms of inflation, the Grocery rate is now double the rate for Drug/Med products. Drug Stores are positive in all measurements and 68% of their 2019>25 growth is real. Supermarkets’ actual $ are up in all comparisons. They are only “really” down monthly and Ytd vs 2021. However, only 11.8% of their 19>25 increase is real growth. Avg 19>25 Growth: Supermarkets: +5.0%, Real: +0.7%; Drug Stores: +5.2%, Real: +3.6%.
• Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are down -9.2% from March, and their only positives are vs 2019 & real vs 2024. Prices are still deflating, -5.2% vs 24. Deflation started in April 23 and is a big change from +1.1% in 22>23 and +7.9% in 21>22. This caused 73.5% of their 33.2% lift since 19 to be real. Avg 19>25 Growth Rate is: +4.9%; Real: +3.7%.
• Gen Mdse Stores – Sales were -2.3% vs Mar, but all YOY sales were up for Club/SupCtrs. $ Stores were +2.6% vs Mar and are only really down Monthly vs 21 and Ytd vs 24. Department Stores are only actually up Ytd vs 21 & from Mar 25. Actual sales are even -29.0% from 19 (Real: -35.6%). The other channels have an average of 43.7% in real growth. Avg 19>25 Growth: SupCtr/Club: 5.2%, Real: 2.4%; $/Value Strs: +5.3%, Real: +2.5%; Dept. Strs: -5.5%, Real: -7.1%.
• Office, Gift & Souvenir Stores – After a 19.2% lift last month sales fell -8.7% from March. However, they are now actually & really up Ytd vs 24 and actually up Ytd vs 21. Their recovery started late, but their progress may be slowly restarting again. However, they are still actually & really down vs 2019. Avg Growth Rate: -0.6%, Real: -2.2%
• Internet/Mail Order – Sales are only +1.5% from March but set a new April record of $113.5B. All measurements are positive, but their YOY growth, +7.3%, is only 49% of their average since 2019. However, 83.5% of their 129.8% growth since 2019 is real. Avg Growth: +14.9%, Real: +13.0%. As expected, they are by far the growth leader since 2019.
• A/O Miscellaneous – Pet Stores are 22>24% of total $. In May 2020 they began their recovery which reached $100B for the first time in 2021. In 2022 their sales dipped in January, July, Sept>Nov, rose in December, fell in Jan>Feb 23, grew Mar>May, fell Jun>Aug, rose Sep>Nov, fell Dec>Jan 24, grew Feb>May, fell Jun>Sep, grew Oct, fell Nov, rose Dec, fell Jan>Feb, grew Mar>Apr. All measurements are again positive, and they are in 2^nd place, behind the Internet, in the % increase vs 19 and vs 21. Also, 78% of their 75.0% growth since 2019 is real. Average 19>25 Growth: 9.8%, Real: +8.0%

April had its usual drop vs March, but Relevant Retail turned it around, +0.6% vs -1.1% avg. Many small channels were also up. The YOY April lift was -34% below avg for Total but only -17% below for Relevant Retl – twice as good. Prices are deflating in 5 channels (7 in Mar) but cumulative inflation still impacts sales as only 4 channels were really up vs Apr 21. The Retail Recovery is still slow. The April commodities CPI was -0.2% but rose slightly to -0.1% in May. Let’s see if it impacts Retail.

Apr>May sales were only down for Auto. An Apr>May Total Retail lift has happened every year since 1992 but the 4.3% increase is -28% below average. There were 2 YOY $ drops, the same as April. $ for all Big Groups but Gas Stations were up vs May 24 but the Total Retail lift of 3.1% vs May 24 was -34% below their +4.8% 92>24 avg. The Relevant Retail 3.9% increase vs 24 was also below their +4.8% avg (-17.4%). Inflation is still a factor. The CPI for all commodities is only -0.1% but it is still 14.0% vs 21. The inflation surge was beginning to accelerate back then (+6.8%). There is some other good “real” news. 3 “real” measurements were down compared to 4 in April. Also, like March & April, 3 Big Groups were all positive. Relevant Retail has been all positive in 10 of the last 12 months.

Overall Inflation Reality– The Total Retail CPI rose to -0.1% and the $ lift vs 24 was -34% below avg. The Restaurant CPI stayed at +3.8% but their $ lift was 13.6% above avg. Gas prices fell to -11.9% but they are still in turmoil. Auto inflation rose to 1.0% and it is +10.9% vs 21. Auto sales grew 2.4% vs 24 (47% below avg – pre-tariff buying done?). Inflation rose to 0.8% for Relevant Retail. Their YOY lift was 17% below avg but they are again all positive. Slow progress continues.

Total Retail – Since Jun 20, every month but Apr 23, Jun 24 & Feb 25 has set a monthly $ales record. In 2023>25, Sales were on a roller coaster. Up Jul>Aug, down Sept, up Oct>Dec, down Jan 24, up Feb>Mar, down April, up May, down Jun, up Jul>Aug, down in Sep, up Oct>Dec, down Jan>Feb 25, up in Mar, down in Apr, up in May. Prices are -0.1% but YOY sales are +3.1%, 34% below the 92>24 avg change of 4.8%. 43.2% of the 19>25 growth is real. Prices are deflating but cumulative inflation is still impacting sales. Growth: 24>25: 3.6%; Avg 19>25: +6.3%, Real: +3.0%.

Restaurants – They were hit hard by the pandemic and didn’t begin recovery until March 2021. However, they have had strong growth since then, exceeding $1T for the 1^st time in 2023. May $ are up vs 24 and they have the biggest lifts vs 21 & 19. Inflation was stable at 3.8% vs 24 but is +25.2% vs 21 and +30.8% vs 19. Their 6.4% YOY lift is 13.6% above their +5.6% 92>24 avg. They are all positive again, but just 35.8% of their 57.9% growth since 2019 is real. They are 3^rd in performance behind Relevant & Total Retail. Recovery started late but inflation started early. Growth: 4.7%; Avg 19>25:+7.9%, Real: +3.2%. They just account for 13.8% of Total Retail $, but their strong growth has helped Total Retail.

Auto (Motor Vehicle & Parts Dealers) – They worked to overcome the stay-at-home attitude with great deals and advertising. They finished 2020 up 1% vs 2019 and hit a record $1.48T in 2021 but much of it was due to skyrocketing inflation. In 22, sales got on a rollercoaster. Inflation started to drop mid-year, but it caused 4 down months in actual $. Their YE real 2022 sales numbers were even worse, -8.2% vs 21 and -8.9% vs 19. 23 started a sales rollercoaster but the $ hit a record, $1.595T. $ fell in Jan 24, grew Feb>Mar, fell Apr, grew May, fell June, grew Jul>Aug, fell Sep, grew Oct, fell Nov, grew Dec, fell Jan>Feb 25, grew Mar, fell Apr>May. May $ were +2.4% vs 24. (47% below avg – pre-tariff buy is probably done). Only real $ vs 21 are negative, but just 30.0% of 19>25 growth is real. Growth: 5.1%; Avg 19>25: +5.7%, Real: +1.9%

Gas Stations – Gas Stations were hit hard by “stay at home”. They started recovery in Mar 21 and inflation began. Sales got on a rollercoaster in 22 but set a record, $583B. Inflation started to slow in Aug and prices slightly deflated in Dec & Feb 23, then strongly fell in Mar>Jul to -20.2%. In Aug they rose to -3.7%. In Sep they were +2.7% but began deflating to -4.2% in Feb 24. In Mar>May 24 their $ales grew, fell June, rose July, fell Aug>Sep, rose Oct, fell Nov>Feb 25, then rose Mar>May. In May, $ales are -6.7% vs 24 (4.8% avg) but up vs A/O years. Real sales are only down Ytd vs 19. Growth: -4.2%; Avg 19>25: +3.2%, Real: -0.3%. They show the cumulative impact of inflation and how deflation can be both positive and negative.

Relevant Retail – Less Auto, Gas and Restaurants – They account for ≈60% of Total Retail $ in a variety of channels, so they took many different paths through the pandemic. Their only down month until Feb 25 was April 2020, and they led the way in Total Retail’s recovery. Sales got on a roller coaster in 2022, but all months set new records with December reaching a new all-time high, $481B, and an annual record of $4.81T. In 2023, the roller coaster continued. A December lift set a new monthly record of $494.7B & an annual record of $4.997T. Sales fell Jan>Feb 24, rose in Mar, fell in Apr, rose in May, fell in June, rose Jul>Aug, fell Sep, rose Oct>Jan 25, fell in Feb, then rose Mar>May. The May 3.9% YOY lift is 17% below their 92>24 avg of +4.8%, but they are all positive again and 53% of their 46.7% 19>25 growth is real – #1 in performance. Growth: 3.9%; Avg 19>25: +6.6%, Real: +3.8%. In 2024 their inflation rate dropped from 3.2% to 0.1%, stabilized at 0.5% Dec>Jan, rose to 0.7% in Mar, slowed to 0.6% in Apr, then rose to 0.8% in May. Inflation is low but its cumulative impact can slow growth. We also saw some pre-tarifflation fear buying. We’ll see what happens next.

YOY inflation has slowed, but cumulative & impending lifts can affect sales. In May, 2 actual YOY $ comparisons were negative, the same as Mar>Apr. In May, there were 3 real drops, down from 4 in April. In April, Gas Stations were down vs 24 but all others had above avg lifts. In May, Gas Stations were again down but only Restaurants had an above avg YOY lift. However, in May. 3 big groups were again all positive. Relevant Retail has now been all positive in 10 of the last 12 months. As expected, in May sales rose vs April, but the results were mixed. The Retail recovery is still slow.

Here’s a more detailed look at May by Key Channels (98% of May Ytd Rel Retl $)

• Relevant Retail: Growth: +3.9%; Avg 19>25: +6.6%, Real: +3.8%. All were up from April. Vs May 24: 8 were up, Real: 9, Vs May 21: 9 were up, Real: 7. Vs 19: Only Dept Stores were down – both actually & really.
• All Department Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2021. Sales are +10.7% from April, but all actual & real YOY measurements are negative. Their -2.8% May YOY drop is 37% better than their -4.4% avg decrease. Growth: -2.8%; Avg 19>25: -5.6%, Real: -7.1%.
• Club/SuprCtr/$- They fueled a big part of the recovery because they focus on value which has broad consumer appeal. $ales are +8.2% from April and they are positive in all measurements. However, only 44.1% of their 35.8% 19>25 lift is real. Their 3.8% YOY May lift is -54% below their 92>24 avg of +8.4%. Growth: 2.8%; Avg 19>25: +5.2%, Real: +2.5%.
• Grocery- They depend on frequent purchases so their changes are usually less radical. Actual $ales are +5.1% from April and positive in all actual comparisons. However cumulative inflation has hit them hard as real $ales are down vs 21 and only 9% of 19>25 growth is real. Plus, their 2.6% YOY lift is -18% below avg. Growth: 3.0%; Avg 19>25: +4.8%, Real: +0.5%.
• Health/Drug Stores – Many stores are essential, but consumers visit less frequently than Grocery stores. $ales are +1.7% from April and they are positive in all comparisons. Inflation has been relatively low so 65% of their 33.4% 19>25 growth is real. Also, their +6.7% YOY lift vs May 24 is 30% above avg. Growth: 6.5%; Avg 19>25: +4.9%, Real: +3.3%
• Clothing and Accessories – Clothes mattered less when you stayed home. That changed in March 2021 with strong growth through 2022. Sales are +13.5% from April and now positive in all measurements. 68% of their 19>25 growth is real. $ales are +5.8% vs May 24, 73% above avg (pre-tariff buying). Growth: 3.9%; Avg 19>25: +3.1%, Real:+2.2%
• Home Furnishings – In mid-2020 consumers’ focus turned to their homes and furniture became a priority. Prices stopped deflating in May. $ are +8.5% from April and are only really down monthly & Ytd vs 21. Only 28% of their 19>25 growth is real. YOY vs 24: +8.8%, 180% above avg. (pre-tariff buying) Growth: 6.8%; Avg 19>25:+3.1%, Real:+0.9%
• Electronic & Appliances – This channel has had many issues. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 21. $ales are +8.2% from April and they are only actually down monthly & Ytd vs 24. Their strong deflation shows in high real numbers. Sales are -1.2% vs May 24. Avg is +2.5%. Growth: -1.9%; Avg 19>25: 0.4%, Real: +3.7%.
• Building Material, Farm & Garden & Hardware – They truly benefited from the consumers’ focus on home. In 2022 the lift slowed as inflation grew to double digits. Prices turned up in Apr>May 25 but sales are +3.8% from April. Actual $ are only down monthly & Ytd vs 24. Real sales are down for all comparisons but vs 2019. Just 19.3% of their 19>25 sales growth is real. YOY sales vs May 24 were -3.0%. Avg is +4.4%. Growth: -0.7%; Avg 19>25: +4.4%, Real: +0.9%.
• Sporting Goods, Hobby and Book Stores – Consumers turned their attention to recreation and Sporting Goods stores sales took off. Book & Hobby Stores recovered more slowly. This group has been on a sales rollercoaster since June 24 and $ are +10.8% from April. Actual sales are only up vs May 24 & 19. Real sales are only down Ytd vs 21. 84% of their 19>25 growth is real. YOY Sales vs May 24 are +2.8%, -13% below avg. Growth: -0.6%; Avg 19>25: +4.0%, Real: +3.4%.
• All Miscellaneous Stores – Pet Stores have been a key part of the strong and growing recovery of this group. They finished 2020 at +0.9% but sales took off in March 21 and have continued to grow. Sales are +13.1% vs April and positive in all comparisons. They are 2^nd in the % increases vs 19 & vs 21 and 72.0% of their 50.3% 19>25 growth is real. Plus, their 7.8% YOY May lift is 81% more than their 92>24 avg of +4.3%. Growth: +6.1%; Avg 19>25: +7.0%, Real: 5.3%.
• NonStore Retailers – 90% of their $ comes from Internet/Mail Order/TV. The pandemic accelerated online spending. They ended 2020 +21.4%. The growth continued in 2021 as sales exceeded $100B for the 1^st time and they broke the $1 Trillion barrier. $ales are +3.2% from April, but their YOY lift of 6.3% is -39% below their 10.4% avg. However, they are positive in all comparisons and 85% of their 115.0% 19>25 growth is real. Growth: 6.4%; Avg 19>25: +13.6%, Real: +11.7%.

Note: Almost without exception, online sales by brick ‘n mortar retailers are recorded with their regular store sales.

Recap – The Retail recovery from the pandemic was largely driven by Relevant Retail and by the end of 2021 it had become very widespread. In 2022, there was a new challenge, the worst inflation in 40 years. Overall, inflation has slowed considerably from its June 22 peak and 6 channels, doing 42% of Rel Retl 2025 $ are currently deflating (7 in Mar & Apr). Deflation helps, but cumulative inflation can still have a negative impact – slowed YOY growth and even sales drops. As expected, $ rose from April for all 11 channels. The lifts were above avg for 8 channels, but Relevant Retail was -2.7% below avg. Their 3.9% lift vs May 24 was also -17.4% below avg. In May, 3 channels had YOY drops vs 24, 2 more than April and the most since 6 in February. 4 lifts were above avg, the same as March & April (Note: Advance April sales showed 6 above avg lifts. The adjusted April data for Sport/Hobby/Book & Miscellaneous was lower so they “flipped” from above to below avg lifts.) There is some good news. In Mar>Apr, 3 Big Groups & 4 Advance channels were all positive. In May, there were still 3 Big Groups but now 5 channels. Relevant Retail has been all positive in 10 of the last 12 months. The biggest concern is still YOY drops and smaller lifts. In April there were 10 lifts vs 24. Relevant Retail and 4 channels were above avg. In May, there were only 8 lifts. The Relevant Retail lift was below avg and again only 4 channels were above avg. The situation is worse.

Finally, here are the details and updated inflation rates for the CPIs used to calculate the impact of inflation on retail groups and channels. This includes special aggregate CPIs created with the instruction and guidance of personnel from the US BLS. I also researched data from the last Economic Census to review the share of sales by product category for the various channels to help in selecting what expenditures to include in specific aggregates. Of course, none of these specially created aggregates are 100% accurate but they are much closer than the overall CPI or available aggregates. The data also includes the CPI changes vs 2021 to show cumulative inflation.

Monthly YOY CPI changes of 0.2% or more are highlighted. (Green = lower; Pink = higher)

Here are some answers to some obvious questions. Note: Inflation rose and Furnishings had the biggest increase.

1. Why is the group for Nonstore different from the Internet?
   • Non-store is not all internet. It also includes Fuel Oil Dealers, the non-motor fuel Energy Commodity.
2. Why is there no Food at home included in Nonstore or Internet?
   • Online Grocery purchasing is becoming popular, but almost all is from companies whose major business is brick ‘n mortar. These online sales are recorded under their primary channel.
3. 5 Channels have the same CPI aggregate but represent a variety of business types.
   • They also have a wide range of product types. Rather than try to build aggregates of a multitude of small expenditure categories, it seemed better to eliminate the biggest, influential groups that they don’t sell. This method is not perfect, but it is certainly closer than any existing aggregate.
4. Why are Grocery and Supermarkets only tied to the Grocery CPI?
   • According to the Economic Census, 76% of their sales comes from Grocery products. Grocery Products are the driver. The balance of their sales comes from a collection of a multitude of categories.
5. What about Drug/Health Stores only being tied to Medical Commodities.
   • An answer similar to the one for Grocery/Supermarkets. However, in this case Medical Commodities account for over 80% of these stores’ total sales.
6. Why do SuperCtrs/Clubs and $ Stores have the same CPI?
   • While the Big Stores sell much more fresh groceries, Groceries account for ¼ of $ Store sales. Both Channels generally offer most of the same product categories, but the actual product mix is different.