Retail Channel $ Update – October Monthly & November Advance

In November, YOY Commodities’ deflation slowed to -0.2% from -1.0%. Although deflating, high cumulative inflation vs 21 can still impact consumer spending and slow actual $ growth.  We saw evidence of this in November. Total Retail sales were +4.0% vs 23, -16% below the average lift since 1992. Relevant Retail was +3.9%, -17% below average. That is concerning and clearly shows that 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 – 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 October Monthly Report and then go to the November 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 October Monthly. All were up from September & there were only 2 actual sales drops – both Gas Stations vs 23. We should note that Gas Stations are still selling less product than in 2019. Also, Relevant Retail is all positive again. They have been all positive in 9 of the last 12 months and now in 5 of the last 6. ($ are Not Seasonally Adjusted)

The October Monthly is less than $0.1B more than the Advance report. Restaurants: No/Chge; Auto: +$0.2B; Gas Stations: -$0.2B; Relevant Retail: -0.1B. As expected, $ales were up vs September for all. A Sep>Oct increase in Total Retail  has happened every year but 2008 since 1992. Plus, the  6.8% lift was double the 3.4% avg. There were only 2 drops in actual sales – Monthly & Ytd vs 23 for Gas Stations. There were 3 “real” sales drops, down from 6 last month. Total & Relevant Retail and Restaurants 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 51% of their growth is real.

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

Overall– All 11 were up from September. vs Oct 23, 9 were actually and 10 “really” up. Vs Oct 21, 8 were up and 7 were real increases. Vs 2019, All were actually up but Off/Gift/Souv and Disc Dept Stores were really down.

• Building Material Stores – The pandemic focus on home has produced sales growth of 32.0% since 2019. Prices for the Bldg/Matl group have inflated 11.0% since 2021 which is having an impact. HomeCtr/Hdwe are only actually down Ytd vs 23, but Farm stores are actually and really down Ytd vs 23 & vs 21. Only the “real” measurement Ytd vs 21 is negative for Home/Hdwe. However, only 26% of the Building Materials group’s 19>24 lift was real. Avg 19>24 Growth: HomeCtr/Hdwe: 5.5%, Real: 1.5%; Farm: 6.5%, Real: 2.4%
• 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 110% of the rate for Drug/Med products. Drug Stores are positive in all measurements and 65% of their 2019>24 growth is real. Supermarkets’ actual $ are up in all measurements and they are only “really” down vs 2021. However, only 6% of their 19>24 increase is real growth. Avg 19>24 Growth: Supermarkets: +5.2%, Real: +0.3%; Drug Stores: +5.3%, Real: +3.5%.
• Sporting Goods Stores – They also benefited from the pandemic in that consumers turned to self-entertainment, especially sports & outdoor activities. Sales are up 1.1% from September but their only positives are actual & real Ytd vs 19. Prices are still deflating, -3.1% vs 23. Deflation started in April 23 and is a big change from +1.1% in 22>23 and +7.9% in 21>22. The result is that 59% of their 34.5% lift since 19 is real. Avg 19>24 Growth Rate is: +6.1%; Real: +3.8%.
• Gen Mdse Stores – All actual & real sales were up for Club/SupCtrs & $ stores. On the other hand, Discount Dept Stores were only actually up vs Oct 23 & Ytd vs 19. All of their real measurements but vs Oct 23 are negative so none of their growth since 2019 is real. The other channels average 45% in real growth. Avg 19>24 Growth: SupCtr/Club: 6.1%, Real: 2.9%; $/Value Strs: +6.4%, Real: +3.1%; Disc. Dept. Strs: +1.6%, Real: -0.4%.
• Office, Gift & Souvenir Stores – Sales were up 21.6% from September. This helped but was not enough. They are only actually up Ytd vs 21 & 19 and all of their real sales numbers, but vs Oct 23 are negative. Their recovery started late, and their progress had stalled. Perhaps, it is beginning to restart. Avg Growth Rate: +0.2%, Real: -1.8%
• Internet/Mail Order – Sales are +10.0% from September and set a new monthly record of $117.5B. All measurements are positive, but their Ytd growth, +9.6%, is still only 60% of their average since 2019. However, 81.9% of their 110..6% growth since 2019 is real. Avg Growth: +16.1%, Real: +13.8%. 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 a record level of $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 in Jun>Aug, rose in Sep>Nov, fell in Dec>Jan 24, grew in Feb>May, fell in Jun>Sep, then grew in October. However, all measurements are positive. They are still in 2^nd place, behind the Internet, in the % increase vs 19 and vs 21. Also, 73% of their 55.4% growth since 2019 is real. Average 19>24 Growth: +9.2%, Real: +7.1%.

October had its usual lift as all small channels were up vs September. The Total Retail YOY lift was 21% above  Avg and 9 of 11 smaller channels and 4 of 5 big groups were up vs Oct 23. Prices are now deflating in 9 channels. Also, cumulative inflation may matter a little less as 7 of 11 channels were really up vs Oct 21. The Retail Recovery has restarted again. The commodities CPI is still deflating but rose to -0.2% in November, the highest since May. Let’s see if it impacts Retail.

Oct>Nov sales were only up for Total & Relevant Retail. An Oct>Nov Total Retail lift has happened in 75% of the years since 1992 but the 0.9% lift is -25% below average. All but 3 actual YOY $ measurements are positive. The drops are from Gas Stations – Monthly vs 23 & 21 and Ytd vs 23. The Total Retail lift of 4.0% vs 23 was the 4^th  biggest increase in 24 but 16% below avg. The Relevant Retail lift vs Nov 23 (+3.9%) was 17% below their 92>23 average. The Auto lift was 54% above average, but Restaurants were -18% below their average. Inflation is still a factor. The CPI for all commodities rose to -0.2% but it is down to 6.6% from 7.9% vs 21. There is some “real” good news. Only 1 measurement was “really” down vs 23 & 21. In October, there were 2 and September had 5. Restaurants, Auto, Total & Relevant Retail were YOY all positive. After 2 months with a negative, Relevant Retail has now been all positive in 6 of the last 7 months.

Overall – Inflation Reality – For Total Retail, deflation slowed to -0.2% but YOY sales grew 4.0% vs 23. For Restaurants, inflation remains high, +3.6% but they are again up in all comparisons. Gas prices fell but that group is still in turmoil. Auto prices rose but are still deflating. Their sales grew vs Nov 23 and they are now all positive. Inflation grew to 0.4% from -0.2% for Relevant Retail but YOY sales are still all positive. Their progress continues but may be slowing.

Total Retail – Since June 20, every month but April 23 & June 24 has set a monthly sales record. In 2023>24, 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 June, up Jul>Aug, down in Sep, up in Oct>Nov. Prices are now -0.2%, but YOY sales are up less than expected. Ytd Sales are up 2.9% vs 23, only 43% of their avg 19>24 growth. Plus, only 39% of the 19>24 growth is real. YOY pricing in Total Retail is still deflating but we see its cumulative impact in Ytd sales. Growth: 23>24: 2.9%;Avg 19>24: +6.8%, Real: +2.9%.

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 and set another monthly sales record in November. They have the biggest Ytd increases vs 23, 21 & 19 and are again all “positive”. Inflation slowed to 3.6% in October but is still +18.2% vs 21 and +27.3% vs 19. Only 34.4% of their 48.5% growth since 19 is real and they remain 3^rd in performance behind Relevant & Total Retail. Recovery started late but inflation started early. Growth: 4.9%; Avg 19>24:+8.2%, Real: +3.1%. They just account for 13.5% of Total Retail $, but their performance has helped Total Retail.

Auto (Motor Vehicle & Parts Dealers) – They actively worked to overcome the stay-at-home attitude with great deals and a lot of 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 sales which are the only reported sales negatives by any big group in 21>22. This is bad but their Y/E real 2022 sales numbers were worse, down -8.2% vs 21 and -8.9% vs 19. 2023 started a true sales rollercoaster but the $ set a new record, $1.595T. $ fell in Jan 24, grew Feb>Mar, fell Apr, grew May, fell June, grew Jul>Aug, fell Sep, grew Oct, fell in Nov. All comparisons are positive, but only 17.9% of 19>24 growth is real. Growth: 2.0%; Avg 19>24: +5.5%, Real: +1.1%

Gas Stations – Gas Stations were hit hard by “stay at home”. They started recovery in March 2021 and inflation began. Sales got on a rollercoaster in 2022 but reached a record $583B. Inflation started to slow in August and prices slightly deflated in Dec & Feb 23, then strongly fell in Mar>Jul to -20.2%. In August they rose to -3.7%. In Sep they were +2.7% but began deflating to -4.2% in Feb 24. In Mar>May they grew, fell June, rose July, then fell Aug>Nov. Actual $ are down monthly vs 23 & 21 & Ytd vs 23. Real sales are down Ytd vs 21 & 19. Growth: -2.9%; Avg 19>24: +4.3%, Real: -0.7%. They show the cumulative impact of inflation and demonstrate how deflation can be both a positive and a 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. However, their only down month 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 in Jan>Feb 24, rose in Mar, fell in Apr, rose in May, fell in June, rose Jul>Aug, fell Sep, then rose in Oct>Nov. The Nov. YOY lift of 3.9% is 17% below their 92>23 avg but all measurements are still positive. Also, 51% of their 41.4% 19>24 growth is real – #1 in performance. Growth: 3.5%; Avg 19>24: +7.2%, Real: +3.9%. America shops here. They began 2024 strong. In Mar>Apr recovery slowed. It got better in May, worsened in June, rebounded in July, stabilized in Aug, slowed in Sep, grew in Oct then slowed in Nov.

Inflation is still low, but the cumulative impact is still there. YOY Sales changes vs 23 are lower and overall, progress has slowed. The changes from October are mixed. The Actual drops increased from 2 to 3 but real drops fell from 3 to 2. Restaurants are back on track and Auto is now all positive, but the Gas Stations’ turmoil is growing. Relevant Retail’s YOY Sales increase was 17% below avg but all measurements are positive for the 6^th time in the last 7 months. Total Retail’s lift was also below avg but they are all positive too. The recovery strongly restarted in October and slowly continues.

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

• Relevant Retail: Growth: +3.5%; Avg: +7.2%, Real: +3.9%. 8 were up from Oct. Vs Nov 23: 9 were up, Real: 10, Vs Nov 21: 8 were up, Real: 5. Vs 19: Only Dept Stores were actually & really down. Furnishing stores were also really down.
• All Department Stores – This group was struggling before the pandemic hit them hard. They began recovery in March 2020. Sales are up 16.9% from October but their actual and real numbers are all negative. They are even actually & really down vs 2019. Growth: -1.1%; Avg 19>24: -0.3%, Real: -1.8%.
• Club/SuprCtr/$- They fueled a big part of the recovery because they focus on value which has broad consumer appeal. $ales are +4.9% from Oct, and they are positive in all measurements. However, only 44.3% of their 34.3% 19>24 lift is real – inflation’s impact. Ytd growth is below Avg for the 8th straight month. Growth: 3.7%; Avg: +6.1%, Real: +2.9%.
• Grocery- These stores depend on frequent purchases, so except for the binge buying in 2020, their changes are usually less radical. Actual $ are +1.1% from Oct and positive in all comparisons. However, cumulative inflation has hit them hard. Real $ are only up vs 23 & 19 and only 6% of 19>24 growth is real. Growth: 2.0%; Avg 19>24: +5.2%, Real: +0.3 %.
• Health/Drug Stores – Many stores are essential, but consumers visit less frequently than Grocery stores. $ are down -5.6% from Oct but they are positive in all actual and real comparisons. Because inflation has been relatively low, 65% of their 28.8% growth from 2019 is real. Growth: 2.7%; Avg 19>24: +5.2%, Real: +3.5%
• Clothing and Accessories – Clothes initially mattered less when you stayed home. That changed in March 2021 with strong growth through 2022. Sales are up 17.7% from Oct and actual sales are up in all comparisons. Real sales are down monthly & Ytd vs 21, but 63% of their 19>24 growth is real. Growth: 2.6%; Avg 19>24: +3.3%, Real:+2.1%
• Home Furnishings – In mid-2020 consumers’ focus turned to their homes and furniture became a priority. Prices are still deflating but they were high in 2022. Sales are +7.7% from Oct, but negative in all measurements but vs Nov 23 & actual vs 2019. They have sold less product in 2024 than in 2019. Growth: -3.3%;Avg 19>24: +2.3%, Real: -0.2%
• Electronic & Appliances – This channel has had many issues. Sales fell in Apr>May of 2020 and didn’t reach 2019 levels until March 21. $ are +20.6% from Oct, but they are only actually positive monthly & ytd vs 23 & ytd vs 19. Due to strong deflation, real sales are positive and exceed actual in all comparisons. Growth: +0.3%; Avg 19>24: +0.5%, Real: +3.6%.
• 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 are still deflating, but sales are -9.7% from Oct. Actual sales are all positive. Prices are deflating vs 23 but are still +16.1% ytd vs 21. Real sales are positive in all comparisons but monthly & Ytd vs 21. However, just 27% of their 19>24 sales growth is real. Growth: -0.7%; Avg 19>24: +5.8%, Real: +1.7%.
• 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 monthly sales rollercoaster since June. $ skyrocketed +21.8% from Oct and all comparisons but ytd vs 23 & 21 are now positive. Their inflation rate has been lower than most groups so 74% of their 25.3% growth since 2019 is real. Growth: -2.9%; Avg 19>24: +4.6%, Real: +3.5%.
• 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 -11.8% vs Oct but positive in all measurements but actual vs Nov 23 & real vs Nov 21. They are still 2^nd in the % increase vs 19 but fell from 3^rd to 4th vs 21. 66.6% of their 39.5% 19>24 growth is real. Growth: +5.6%; Avg 19>24: +6.9%, Real: 4.8%.
• 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 +11.0% from Oct, but ytd growth fell to 7.9% from 8.1% and they are now 46% below Avg. They are positive in all comparisons and 81% of their 98.4% 19>24 growth is real. Growth: 7.9%; Avg: +14.7%, Real: +12.4%.

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 7 channels are deflating (down from 8 in Oct). Any deflation should help the Retail Situation. As expected, $ grew for most from Oct, but the 4.6% lift for Relevant Retail was -29% less than their 92>23 avg – a big turnaround from +62% in October. Also in October, their 5.5% lift vs 23 was 21% above average, 9 of 11 channels had a YOY $ lift and all 11 sold more product. In November, their 3.9% YOY lift was 17% below avg, but 9 of 11 had a YOY $ lift and 10 sold more product. Also, in October, there were 4 channels with 6.5+% lifts. In November, it fell to 1. Growth slowed in November, but it still continues. Here’s some truly good news. Restaurants, Total & Relevant Retail and now Auto are positive in all comparisons. Relevant Retail has now been all positive in 6 of 7 months. The recovery strongly restarted in October. In November it slowed but continued. We need many more “Octobers” to fully recover.

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 since 2021 to show cumulative inflation.

Here are some answers to some obvious questions. ALSO NOTE: 16 of the 23 November “pinks” are slowed deflation

1. Why is the group for Non-store 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 Non-store 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. 6 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.