Retail Channel $ Update – February Monthly & March Advance

In March, YOY Commodities’ inflation jumped up to 3.4% from 1.2%. Even when inflation rates are low, high cumulative inflation vs 21 can still impact consumer spending and slow $ales growth.  We saw evidence of this in March. Total Retail $ were +4.5% vs 25, 6.4% below the average 92>25 lift. However, Relevant Retail was +6.0%, 27% above the March avg. The situation is definitely complex and there is still a long road to full recovery. 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 Census Bureau 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 – normally, 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 February Monthly Report and then go to the March 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 February Monthly. All but Auto were down from January but there were only 2 actual sales drops – monthly/ytd vs 25 in Gas Stations. We should note: Gas Stations are still selling a little more product than in 2019. Also, Relevant Retail is all positive again. They’ve been all positive in 21 of the last 23 months. ($ are Not Seasonally Adjusted)

The February Monthly is $1.6B more than the Advance report. Restaurants: +$0.3B; Auto: -$0.2B; Gas Stations: +$0.1B; Relevant Retail: +$1.4B. Relevant Retail was the driver in the $ales drop vs January and only Auto was up. A Jan>Feb decrease in Total Retail  has happened in 65% of the years since 1992. However, the 2.9% drop was 4 times more than the 0.7% avg. There were 2 drops in actual sales – Monthly/Ytd vs 25 for Gas Stations. There were no “real” sales drops, the same as Dec/Jan. All but Gas Stations were all positive. Restaurants still have the biggest increases vs 21 & 19 but Relevant Retail stayed at the top of “real” performance vs 2019. However, only 53.2% of their growth is real.

Now, let’s see how some Key Pet Relevant channels did in February in the Stacked Bar Graph Format

Overall– 8 of 11 were down from Jan. Vs Feb 25, 8 were actually and 6 “really” up. Vs Feb 21, 11 were up but only 6 were real lifts. Vs 2019, Only Dept Strs & Off/Gift/Souv were actually & really down.

• Building Material Stores – The pandemic focus on home has produced $ growth of 31.9% since 2019. Prices for the group have inflated 26.0% from 21 and 28.3% from 2019, which is having an impact. HomeCtr/Hdwe Sales vs Jan were -3.8% but +1.2% for Farm Stores. Vs other years, HomCtr/Hdwe are actually up & really down for all but 2019. Farm stores are actually up for all, but their Real $ were down vs 21. Bldg/Mat group’s 19>26 real growth was 2.8%. avg: 0.4%. HomeCtr/Hdwe: Ytd: 2.4%; Avg 19>26 Growth: 3.7%, Real: 0.1%; Farm: Ytd: +7.7%; Avg: 5.8%, Real: 2.1%
• Food & Drug – Both are essential. Except for the COVID food binge, they tend to have smaller changes in $. Vs Jan: Supermarkets: -11.0%; Drug: -5.1%. In terms of inflation, the Groceries rate is 24 times higher than Drug/Med products. Drug Stores are positive in all measurements and 64.3% of their 2019>26 growth is real. Supermarkets’ actual $ are up in all comparisons, but vs Feb 25. They are only “really” up vs 2019 and only 8.7% of their 19>26 increase is real growth. Supermarkets: Ytd: +0.7%; Avg 19>26: +4.5%, Real: +0.4%; Drug Stores: Ytd: +1.5%; Avg: +4.4%, Real: +3.0%.
• Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are -1.5% from Jan, but their only negative is real Ytd vs 21. Prices stopped deflating vs last year. Deflation started in April 23 and was a big change from +1.1% in 22>23 & +7.9% in 21>22. This caused 70% of their 44% lift since 2019 to be real. Ytd: 5.4%; Avg 19>26: +5.4%; Real: +3.9%
• Gen Mdse Stores – Sales were -6.1% vs Jan. All YOY comparisons but 1 were up for $ Strs & SupCtr/Club (real vs 25) Dept Stores are negative in all comparisons but actual Feb/Ytd vs 21. Their Actual sales are even -33.3% from 19 (Real: -40.6%). The other channels have an average of 43.9% in real growth. SupCtr/Club: Ytd: +2.3%; Avg 19>26: 5.0%, Real: 2.4%; $/Value Strs: Ytd: +4.5%; Avg: +5.4%, Real: +2.7%; Dept. Strs: Ytd: -7.8%; Avg: -5.6%, Real: -7.2%.
• Office, Gift & Souvenir Stores– Sales fell -4.3% from Jan. They are actually up Feb/Ytd vs 21. All others are down. Their recovery started late. It was slowly restarting in Jun/Jul, but their progress had slowed. It took off in Oct, slowed in Nov, grew in Dec, then slowed in Jan/Feb. Recovery takes some time. Ytd: -1.5%; Avg Growth Rate: -0.8%, Real: -2.4%
• Internet/Mail Order – Sales are -5.1% from Jan to $110.2B, a Feb record. All YOY measurements are positive, but their YOY growth, +8.2%, is only 59.0% of their average since 2019. However, 81.6% of their 148.1% growth since 2019 is real. Ytd: +8.2%; Avg Growth: +13.9%, Real: +12.0%. 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 1^st time in 21. In 22 their $ dipped in Jan, Jul, Sep>Nov, rose Dec, fell 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>May, fell Jun>Sep, rose Oct, fell Nov, rose Dec, fell Jan, rose Feb. All comparisons are positive, and they are #2 in the increase vs 2019 but #1 vs 2021. Also, 78% of their 101% growth since 2019 is real. Ytd: +14.6%; Avg 19>26: 10.5%, Real: +8.7%

Feb had its usual drop vs Jan, but the Rel Retl drop was only half of the avg. 8 of 11 small channels were down. The YOY lift vs 25 was below avg for Total: -16% & Relevant Retl: -10%, but 4 big groups & 8 smaller channels had lifts. Also, prices are only deflating in Auto & Gas Stations, but cumulative inflation has an impact, as only 6 channels were really up vs Feb 21. The Recovery is slow. In Mar, the commodities CPI rose from 1.2% in Feb to 3.4%. Let’s see if it impacts Retail

Feb>Mar sales were up for all. A Feb>Mar Total Retail lift has happened in every year but 2020 since 1992. The 16% lift is 16.6% more than the 13.7% avg. There was only 1 YOY $ drop, 1 less than Feb. 4 Big Groups were up vs 25 but the Total Retail lift of 4.5% vs Mar 25 was 6.4% below their +4.8% 92>25 avg. However, the Relevant Retail 6.0% increase vs Mar 25 was 27% above their +4.7% avg. Inflation is still a factor. The CPI for all commodities rose to 3.4% from 1.2% vs last month and it is now +20.7% vs 21. There is some bad “real” news. In Jan/Feb, no “real” measurement was down. In Mar, there were 8. Plus, Gas Stations are again selling less Gas than in 2019. Also, only 2 Big Groups are all positive. In Dec>Feb there were 4. Positive Note: Relevant Retail has now been all positive in 22 of the last 24 months.

Overall Inflation Reality– The Total Retail CPI rose to 3.4% and the $ lift vs 25 was 6.4% below avg. The Restaurant CPI slowed to +3.7% but their $ lift was 72.5% below avg. The Gas CPI rose from -5.6% to +18.9%. They are still in turmoil. Auto inflation is  -0.9% vs 25 but +17.9% vs 21. Sales were -2.3% vs 25. Their avg change is +4.6%. Inflation rose to 2.3% for Relevant Retail but their lift was 27% above avg and they are again all positive. Big Group progress is slow in 2026.

Total Retail – Since Jun 20, every month but Apr 23, Jun 24 & Feb 25 has set a monthly $ales record. In 2023>26, Sales got on a roller coaster. Up Oct>Dec, down Jan 24, up Feb>Mar, down April, up May, down Jun, up Jul>Aug, down Sep, up Oct>Dec, down Jan>Feb 25, up Mar, down Apr, up May, down Jun, up Jul>Aug, down Sep, up Oct, down Nov, up Dec, down Jan>Feb, up Mar. Prices are 3.4% and YOY $ are +4.5%, 6.4% below avg. 42% of 19>26 growth is real. CPIs rose, but cumulative inflation may have the biggest impact on sales. Growth: 25>26: 3.8%; Avg 19>26: +6.0%, Real: +2.8%

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. Mar $ are up vs 25 and they have the biggest lifts vs 21 & 19. Inflation slowed to 3.7% vs last year, but it is +30.0% vs 21 and +35.0% vs 19. Their 1.6% YOY lift is 72.5% below their +5.7% 92>25 avg. They are no longer all positive and just 33% of their 63% growth since 2019 is real. They stayed 4^th in performance. Recovery started late but inflation started early. Growth: 3.8%; Avg 19>26: +7.3%, Real: +2.7%. They just account for 13.8% of Total Retail $, but their strong growth has helped Total Retail.

Auto (Motor Vehicle/Parts Dealers) – They overcame the stay-at-home attitude with deals & advertising. They finished 2020 up 1% vs 2019 and hit a record $1.48T in 2021 but much was due to high prices. In 22, sales got on a rollercoaster. Inflation started to drop mid-year, but it caused 4 down months in $. Their YE real 22 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>Jun, rose Jul>Aug, fell Sep, rose Oct, fell Nov, rose Dec, fell Jan, rose Feb, fell Mar. Mar $ were -2.3% vs 25. Avg: 4.3%. They are no longer all positive and just 34% of 19>26 growth is real. Growth: 0.3%; Avg 19>26: +5.0%, 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 Sep they were +2.7% but began deflating to -4.2% in Feb 24. In Mar>May $ grew, fell Jun, rose July, fell Aug/Sep, rose Oct, fell Nov>Feb 25, rose Mar>May, fell Jun, rose Jul, fell Aug>Oct, up Nov, fell Dec/Jan, rose Feb/Mar. Mar $ vs 25: +18.3% (4.4% avg). No $ downs but all real $, including vs 19 are down. Growth: +5.6%; Avg 19>26:+4.1%, Real: -0.9%. They show the impact of inflation can be “really” negative.

Relevant Retail – Less Auto, Gas and Restaurants– They account for ≈60% of Total Retail $ in a variety of channels. Their only down month until Feb 25 was Apr 20, and they led the way in Retail’s recovery. Sales got on a roller coaster in 22, but all months set new records with Dec reaching a new all-time high, $481B, and an annual record of $4.81T. In 23, the roller coaster continued. A Dec lift set a new monthly record of $494.7B & an annual record of $4.997T. $ales got back on the roller coaster in 24. The ride continued as $ rose Oct>Jan 25, fell Feb, rose Mar>May, fell Jun, rose Jul, fell Aug>Sep, rose Oct>Dec, fell Jan>Feb 26, rose Mar. The Mar 6% YOY lift is 27% above their 92>25 avg of +4.7%. They are all positive again and 53% of their 54% 19>26 growth is real, again #1 in Big Group performance. Growth: 4.8%; Avg 19>26: +6.4%, Real: +3.7%. In 2024 their inflation rate fell from 3.2% to 0.1%. It rose in 25 to 1.8% in Sep, slowed to 1.5% in Oct>Nov, rose to 2.0% in Dec>Jan & 2.3% in Mar. YOY Inflation is low, but its cumulative impact can slow growth.

As expected, Mar sales rose vs Feb. Total Retl was +16.0%, +16.6% above avg; Relevant Retl was +14.1%, +13.6% above avg. In Mar, 1 actual YOY $ comparison was negative, 1 less than Dec>Feb. There were 0 real drops in Dec>Feb. In Mar, there were 9. In Dec, all were up vs last year but only Rel. Retl’s lift was above avg. In Jan, 3 lifts, all below avg. In Feb, 4 lifts, all below avg. In Mar, 4 lifts. Rel Retl & Gas Stat. were above avg. In Dec>Feb, 4 big groups were all positive. In Mar, there were only 2. Relevant Retail has now been all positive in 22 of 24 months.  YOY inflation is growing, but still relatively low. However, cumulative & impending lifts can also affect sales. There are mixed results, so progress is slow.

Here’s a more detailed look at March by Key Channels in the Stacked Bar Graph Format

• Relevant Retail: Ytd Growth: +4.8%; Avg 19>26: +6.4%; Real: 3.7%. % Real Growth: 52.9%. All 11 were up from Feb. Vs Mar 25: 10 were up, 7 Real. Vs Mar 21: 6 were up; 6 Real. Vs 19: Dept Stores were down & “real” Furniture Stores.
• All Department Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 21. Sales are +25.1% from Feb, but all YOY measurements but actual vs Mar 25 & Ytd vs 21 are negative. Their 1.3% Mar YOY lift is much better than their -4.4% avg. Ytd Growth: -4.3%; Avg 19>26: -5.4%; Real:-7.0%. % Real growth: None
• Club/SuprCtr/$- They fueled a big part of the recovery because they focus on value which has broad consumer appeal. $ales are +14.0% from Feb, and they are up in all comparisons. Their 3.1% YOY Mar lift is -64% below their 92>25 avg of +8.4%. Ytd Growth: 2.7%; Avg 19>26: +5.0%; Real: 2.4%. % Real Growth: 41.8%
• Grocery- They depend on frequent purchases, so their changes are usually less radical. $ales are +9.5% from Feb. They are actually up for all but really down for all but vs 2019. Cumulative inflation has hit them hard. Their +0.3% YOY Mar lift is 89% below their +3.2% avg. Ytd Growth: 0.5%; Avg 19>26: +4.3%; Real: 0.2%. % Real Growth: 5.0%
• Health/Drug Stores – Many stores are essential, but consumers visit less frequently than Grocery stores. $ are +10.6% from Feb and they are positive in all YOY comparisons. Inflation has been relatively low, so it is surprising that their +3.0% YOY lift vs Mar 25 is 42.7% below avg. Ytd Growth: 2.0%; Avg 19>26: +4.4%; Real: 3.0%. % Real Growth: 65.4%
• Clothing and Accessories – Clothes mattered less if you stayed home. That changed in March 2021 with strong growth through 2022. Sales are +18.9% from Feb and positive in all YOY measurements. $ales are +7.0% vs Mar 25, more than double their 3.4% avg. Ytd Growth: 7.1%; Avg 19>26: +3.5%; Real: 2.3%. % Real Growth: 64.0%.
• Home Furnishings – In mid-2020 consumers’ focus turned to their homes and furniture became a priority. Inflation is 4.3% in Mar. $ are +15.2% from Feb but they are only actually up vs 2019. All real sales are down. YOY vs Mar 25, they are -0.4%, far below their 3.3% avg lift. Ytd Growth: -2.8%; Avg 19>26:+2.3%; Real: -0.2%. % Real Growth: None.
• Electronic/Appliances – They have had many issues. $ fell in Apr>May of 2020 and didn’t reach 2019 levels until March 21. $ are +9.4% from Feb and they are up in all but vs Mar 21. Strong deflation made real sales very high. Sales are +6.1% vs Mar 25, 2.8 times above the 2.2% avg. Ytd Growth: 5.3%; Avg 19>26: 0.8%; Real: 4.0%. % Real Growth: 100+%
• Bldg Matl, Farm & Garden & Hdwe – They truly benefited from the consumers’ focus on home. In 2022 the lift slowed as inflation grew to double digits. Prices turned up again in Apr>Sep 25, dropped Oct/Nov, rose Dec/Jan to 5.6%, fell Feb to 4.8%, rose Mar to 6.0%. Sales are +27.8% from Feb and are only actually down vs Mar 21 & really up vs 2019. Sales vs Mar 25 were +5.3%, 27% above their 4.1% Avg. Ytd Growth: 4.0%; Avg 19>26: 4.4%; Real: 0.7%. % Real Growth: 14.5%
• 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. They have been on a sales roller coaster since June 24 and $ are +19.3% from Feb. All YOY comparisons, but actual & real vs Mar 21 are positive. YOY Sales vs Mar 25 are +5.3%, 61.8% more than their 3.25% avg. Ytd Growth: +7.2%; Avg 19>26: +4.5%; Real: 3.7%. % Real Growth: 79.5%.
• 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 +12.8% vs Feb and positive in all comparisons. They are 2^nd in the % increase vs 19 & vs 21. Plus, their 10.3% YOY Mar lift is 2.2 times more than their 92>25 avg of +4.7%. Ytd Growth: +12.0%; Avg 19>26: +8.1%; Real: 6.3%. % Real Growth: 73.4%.
• 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. $ are +13.3% from Feb and their YOY lift of 13.2% is 33.6% above the 9.9% avg. Plus, they are positive in all comparisons. Ytd Growth: 9.7%; Avg 19>26: +13.1%; Real: 11.2%. % Real Growth: 80.3%.

Recap – Driven by Relevant Retail, the Pandemic recovery was widespread by Y/E 21. In 22 we were hit with the strongest inflation in 40 years. Inflation has slowed considerably from its Jun 22 peak, but only 1 smaller channel is now deflating. Deflation helps, but cumulative inflation can still have a negative impact – slowed YOY growth and even sales drops. As expected, $ rose from Feb for all small channels. 10 of the 11 lifts were above avg – Very Good! The biggest concern is still YOY drops and smaller lifts. Relevant Retail’s 6.0% lift vs Mar 25 was 27% above avg. 10 channels had a YOY lift vs last year, 2 more than Feb. 7 of the 10 lifts were above avg, 3 more than Feb, but equal to the 7 back in Oct 25. There are multiple factors slowing growth, but the major one is high prices from cumulative inflation. Dec is the biggest retail month, and Feb is usually the worst. The Feb>Mar lift is 2^nd to Nov>Dec. Total & Relevant Retail had record monthly sales for Dec>Mar. The Mar Yoy lift was -6% below avg for Total but +27% above for Relevant. The situation is definitely better than Feb as only 4 of 11 channels (7 in Feb) had a below avg lift or a drop vs 25. We’ll see what happens.

Here are the Feb/Mar 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 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 includes the CPI changes vs 21 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 only slowed for Grocery, Furniture & Electronics.

• 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.
• 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.
• 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.
• 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.
• 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.
• 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.