Monthly Retail Sales Update: September Final, October Advance

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John Gibbons, the Pet Business Professor and president of A GPS for Pet Businesses, has recently released two new monthly retail sales reports. According to Gibbons, the retail market began its recovery in May 2020 after hitting bottom in April. The road back has been long and complex and Consumer spending behavior continues to evolve. We have not beaten the virus yet so we will continue to track the ongoing recovery of the retail marketplace with data from two reports provided by the U.S. Census Bureau.

The Reports are the Monthly Retail Sales Report and the Advance Retail Sales Report. 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 two weeks after month end. The Monthly Final Report includes data from all respondents, so it takes longer to compile the data – about six 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 final monthly reports. The biggest difference is that the full sample in the Final report allows us to “drill” a little deeper into the retail channels.

We will begin with the Final Retail Report for September and then move to the Advance Report for October. Remember, the retail impact of the pandemic began in March 2020, peaked in April, then recovery started in May. We will compare 2021 to both 2020 and 2019 to document the progress that the retail market has made towards a full recovery.

Both reports include the following:

• Total Retail, Restaurants, Auto, Gas Stations and Relevant Retail (removing Restaurants, Auto and Gas)
• Individual Channel Data – This will be more detailed in the “Final” reports and we fill focus on Pet Relevant Channels

The information will be presented in detailed charts to facilitate visual comparison between groups/channels of:

• Current Month change – % & sales vs previous month
• Current Month change – % & sales vs same month in 2020 and 2019
• Current YTD change – % & sales vs 2020 and 2019
• Monthly and Year To Date sales will also be shown for each group/channel

First, the September Final. Retail hit bottom in April 2020 but began recovery, hitting record sales in December. Sales fell in January and February but set a new sales record in March. In April, sales fell but rebounded in May to another record high. Sales have slowly declined through September. Here are the major retail groups. (All Sales are Actual, Not Seasonally Adjusted)

The final total is $1.7B more than the Advance report projected a month ago. All groups but Relevant Retail were up slightly. The specifics were: Relevant Retail: -$0.3B; Gas Stations: +$1.0B; Auto: +$0.8B: Restaurants: +$0.3B. Sales vs August were down in all groups. As you recall, Total Retail sales broke $600B for the 1st time in December. Although September sales were slightly below December, they were still the eighth highest of all time. Auto continues to have the strongest recovery with an annual YTD growth rate since 2019 of +11.8%. A spending dip in September is the “norm” in U.S. Retail. It is more important that for the fourth consecutive month, all groups were positive in all other measurements.

Now, let’s see how some Key Pet Relevant channels were doing in September.

• Overall – 10 of 11 channels were down vs August but all were up vs September 2020 and September 2019. In YTD sales, all were up vs 2020 and 10 vs 2019. September was the ninth biggest month in history for Relevant Retail.
• Building Material Stores – Their amazing lift may finally be slowing. The surge came as a result of pandemic spending patterns developed in 2020. Consumers began focusing on their homes. Their Spring lift has slowed in 2021 but Building and Farm stores are still going strong. Sporting Goods stores have a similar spending pattern. Sales took off in May 2020, hit a record peak in December and continued strong into 2021, peaking in March. Sales have slowed with a big drop in September, but YTD they are +47.7% vs 2019, an Annual Growth Rate of 21.5%!
• Food & Drug – Supermarkets were +$77.7B in 2020. Sales are down vs Aug. but YTD are on par with the 2020 binge. They are up 19.5% vs September 2019 and 14.9% vs YTD 2019. Drug Stores were +$17B (+5.7%) for 2020. They had a record March. Sales have been stable since then, but all other measurements are positive and YTD sales are +7.6%.
• General Merchandise Stores – Sales in all channels fell in January and February then spiked in March. Monthly sales by channel have been slightly up or down since then but GM has been strong, +15% YTD. Sales for Stores and Clubs/Super Centers are leading the way with a combined annual growth rate of +8.8%. These channels promote value. Their success reinforces its importance to consumers. Discount Deptartment Stores sales fell 11.5%, but that’s much better than -19% in 2019.
• Office, Gift & Souvenir Stores – Sales fell from August but were +22.3% vs September 2020. The pandemic hit them hard. They are still down YTD vs 2019. Recovery is still a long way off, but their situation is improving.
• Internet/Mail Order – Even their sales were down vs August but the pandemic continues to foster this channel’s growth. In September of 2019, their YTD growth was +14.1%. Now, their average growth rate is +19.6% – up 39.0%
• A/O Miscellaneous – This is a group of small to midsized specialty retailers – chains and independents. It includes Florists, Art Stores and Pet Stores (22>24% of total sales). Pet Stores were usually essential, but most stores were not. In May 2020 they began their recovery. Their 2020 total sales were up +11.6%. September was their third biggest month, and they had the only increase from August. YTD sales are +27.4% vs 2020 and +40.5% vs 2019.

Relevant Retail began recovery in May and set a sales record in December. Sales fell in January and February, turned up again in March and began a monthly up/down rollercoaster. September sales are down but all but one channel are ahead of all 2020 and 2019 sales. The key drivers are the Internet, Super Centers/Clubs/Dollar Stores and Hardware/Farm.

Now, the Advance numbers for October.

2020 was a memorable year for both its traumas and triumphs. In April and May, we experienced the 2 biggest retail spending drops in history, but the problems actually began in March. Retail sales began to recover in June and in October, YTD Total Retail turned positive for the first time since February. In December, Total Retail broke the $600B barrier – a historic first. Sales fell from their December peak in both January and February but still set monthly sales records. Then they took off again in March, setting a new monthly sales record of $633B. April sales were down slightly but they took off again in May to set yet another spending record, $643.1B. June>Sept sales fell but then came back in October with the third biggest sales month in history. All major groups were up from September and were positive in all other measurements for the fifth straight month. Some other areas of the economy are still suffering, some spending behavior has changed, and inflation has become a bigger factor in increases. However, consumers continue to spend “big bucks,” especially in Relevant Retail, and the overall Retail marketplace continues its strong recovery.

Total Retail – In March, Total Retail was $633.1B, a new record. In April, $ales dipped to $625.5B but were still $218.3B more than April 2020 – a record increase, more than double the size of last year’s record drop. In May, sales set another new record, $643.1B. June>Sept sales dipped slightly but stayed above $600B. October brought a resurgence with monthly sales of $634.6B, the third biggest month in history. Moreover, the current YTD average annual sales growth rate since 2019 is 9.3%, the highest ever in records going back to 1992. INFLATION NOTE: Retail $ were +14.7% vs October 2020. Inflation was +6.2% so up to 42% of the lift came just from higher prices. The “Real” increase was +8.5%. In October 2019 (pre-pandemic), Retail $ were +3.7% over 2018. Inflation was 1.8%, 48% of the lift. This produced a “Real” increase of +1.9%. Long term, strong inflation can slow spending but right now, Retail is outperforming pre-COVID 2019.

Restaurants – This group has no negative measurements vs 2020 or 2019 for 5 straight months. February 2020 YTD sales were up 8.1% vs 2019. The Pandemic changed that. Restaurants started to close or cease in person dining in March and sales fell -$33.3B (-52.5%) compared to March 2019. Sales bottomed out in April at $30.1B, the lowest April sales since 2003. Sales started to slowly increase in May but never reached a level higher than 88% compared to the previous year. 2021 started off slowly. Through February, YTD sales were down -16.7% from pre-pandemic 2020 and -10.0% from 2019. In March sales took off and grew steadily from April through July. Sales dipped slightly in August/September but came back strong in October. YTD their $ are +30.4% vs 2020 and +5.0% vs 2019. Their recovery is getting stronger.

Auto (Motor Vehicle & Parts Dealers) – Staying home causes your car to be less of a focus in your life. Sales began to fall in March and hit bottom in April. Auto Dealers began combating this “stay at home” attitude with fantastic deals and a lot of advertising. It worked. They finished 2020 up 1% vs 2019 and have returned to a strong positive pattern in 2021. The “attitude” grew amazingly positive in March and has slowed only slightly from April>October as sales exceeded $123B in all 8 months – the 8 biggest months in history. To show the effectiveness of their campaign, just look at the data. This group has exceeded $110B in monthly sales only 17 times in history. 14 of those occurred after the onset of the pandemic.  YTD Average Annual Growth Since 2019 = +11.6% – the best performance of any big group.

Gas Stations – Gas Station $ales have been a mixed bag. If you drive less, you visit the gas station less often. Sales turned down in March 2020 and reached their low point in April. They moved up but generally stayed about 15% below 2019 levels for the rest of 2020. In February they were still behind 2020 in monthly and YTD $ but ahead of 2019 in both measurements. In March, sales skyrocketed and continued to grow to to a record $53.5B in July. They fell in Aug/Sept but turned up in October. They have been positive in all measurements vs 2019 & 2020 since March. Their comeback continues but inflation comes to the forefront in this channel. Gas prices can be pretty volatile. They dipped in the first 2 months of the pandemic but then returned to more normal levels for the balance of 2020. They began strongly inflating in 2021. In fact, October 2021 prices were 49.6% above 2020. That means that the 45.3% year over year $ lift in October was actually a decrease in the amount of gas sold. YTD Annual Growth Rate Since 2019 = +6.0%

Relevant Retail – Less Auto, Gas and Restaurants – This is what we consider the “core” of U.S. retail and has traditionally accounted for about 60% of Total Retail Spending. In looking at the individual channels in this group, we have seen a variety of results due to many factors, like non-essential closures, binge buying, online shopping and a consumer focus on “home”. However, overall, April 2020 was the only month in which spending in this group was down vs 2019. Monthly $ales exceeded $400B for the first time ever in December. They finished 2020 up $260B, +7.1%. Their performance was the only reason that Total Retail was able to finish 2020 with positive numbers, +0.5%. Sales fell in January and February 2021 but set monthly records. In March they turned sharply up and then began an up/down sales roller coaster ride. In October they reached the second highest amount on record. We should also note that while December 2020 is still No. 1, March>October are 8 of the 10 highest $ months of all time. Relevant Retail has exceeded $361B in monthly sales 10 times in history. Nine of those have occurred since the onset of the pandemic. It is also very important that the Relevant Retail group has posted positive numbers versus last year and YTD for every month since April 2020 and their average YTD growth rate since 2019 is +10.4%. The recovery has become widespread as all channels have been positive in all measurements vs both 2020 and 2019 for 3 consecutive months. However, the primary drivers throughout the pandemic were and continue to be Non-store, Grocery, Super Centers/Clubs/Dollar Stores plus an exceptionally long 2020 “spring lift” from Hardware/Farm and Sporting Goods.

Now let’s look at what is happening in the individual retail channels to see where the $ are coming from. October $ were up 5.0% from September and an increase occurred in all but one channel. Remember, the groups in the chart are less defined than in the Final Monthly reports and we will look across the whole market, not just pet relevant outlets.

Sales in 12 of 13 channels were up vs September but all were up vs October 2020, vs October 2019 and YTD vs 2020 and 2019. (Relevant Retail YTD Average Annual Growth Rate since 2019 = +10.4%)

After hitting bottom in April 2020, Relevant Retail has now beaten the previous year’s $ for 18 consecutive months. The group set an all-time record of $407B in December and finished 2020 +$260B vs 2019. 2021 started strong, with record sales in every month. March > Oct. were eight of the 10 biggest of all time. Essential channels are still the primary drivers:

• Non-store Retailers – The biggest driver. Online shopping continues to grow in number of households and in sales.
• Food & Beverage – Grocery– Restaurant sales are improving but consumers continue to eat and drink more at home.
• Building Materials/Garden/Farm– Their “Spring” lift may be ending but consumers are still focused on their homes.
• Super Centers/Club/Value/Dollar Stores – They kept the GM channel strongly positive. Value is still a big consumer priority.

Regarding the Individual Large Channels (Includes YTD Average Annual Growth Rate since 2019)

General Merchandise Stores – Sales increased for all channels in October and all other numbers were also positive. Even Department Store sales are growing increasingly positive. After dipping to +7.5% in February, the growth rate by Club/Super Center/Dollar Stores held at about 8.8% and then moved up in October. These stores are still the key to this channel.

• YTD Average Annual Growth: All GM = +7.9%; Department Stores = +1.9%; Club/Super Center/Dollar Stores = +9.1%

Food and Beverage, plus Health & Personal Care Stores – Sales in Grocery were down in March>May from 2020 – No surprise, as these were 2020 binge months. In June>Oct they beat 2020 $. The Health, Personal Care group finished 2020 at +1.8% but 2021 has been better. October was up 1.6% from September but YTD they are +10% vs both 2020 & 2019.

• YTD Average Annual Growth: Grocery = +7.3%; Health/Drug Stores = +5.2%

Clothing and Accessories; Electronic & Appliances; Home Furnishings – March > Oct have been spectacular for all these channels. The increase in Clothing vs October 2020 was less than usual but was still +22.7%. Only Furniture was down vs September, but all groups remained positive in all measurements vs 2020 or 2019 for the 8th consecutive month.

• YTD Average Annual Growth: Clothing = +5.4%; Electronic/Appliance = +3.7%; Furniture = +10.0%

Building Material, Farm & Garden & Hardware – Their “Spring” lift which began in 2020 has slowed but they have greatly benefited from consumers focusing on their home needs. They finished 2020 +53B (+13.8%). Sales took off in March, set a record in April, but has since slowed and stabilized. They are still +13.6% YTD. Average Annual Growth = +13.5%

Sporting Goods, Hobby and Book Stores – Book and Hobby stores are open but Sporting Goods stores have driven the lift in this group. Consumers turned their attention to personal recreation and sales in Sporting Goods outlets took off. The group ended 2020 +5.5% vs 2019. The growth accelerated in 2021. Sales grew 1% vs September, but it was still good enough for the 10^th consecutive monthly record. October YTD they are +31.0% vs 2020. Average Annual Growth = +17.1%

All Miscellaneous Stores – Pet Stores were deemed essential but most other stores were not, so closures hit this group particularly hard. Sales hit bottom at -$3.8B in April then began to rebound. They finished with a strong December and ended 2020 -$1.0B, -0.7%. In March 2021, sales took off and reached the $14+B level in May and they have stayed there. Sales grew 8.0% to $15.7B in October, which set a new all-time sales record and broke the $15B barrier. YTD sales are now +28.1% vs 2020 +27.1% vs 2019. Their recovery has become very real. YTD Average Annual Growth = +12.7% (Fourth Best)

Non-Store Retailers – Internet/Mail Order/TV was responsible for 90% of the volume of this group. The pandemic accelerated the movement to online retail. In February 2020, NonStore sales were +8.6% YTD. In December monthly sales exceeded $100B for the first time. They ended 2020 at +21.4%, +$162.9B. This was 63% of the total sales increase for Relevant Retail Channels. Their 2020 performance far exceeded their 12.9% increase in 2019 and every month in 2021 has produced record $. October was +6.1% vs September and +7.4% vs 2020. YTD $ are +14.2%. YTD Average Annual Growth = +17.6%

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

Recap – We had quite a year in 2020. April and May had the two biggest year-over-year sales decreases in history while December sales broke $600B for the first time. 2021 may become even more memorable. March>October are eight of the nine biggest sales months in history with the eight largest year-over-year monthly sales increases ever. The total increase was +$945B, which is over five times the -$174B decrease from March>May 2020 which caused so much concern. At year end 2020, Restaurants and Gas Stations were still struggling but Auto had largely recovered. Relevant retail had segments that also struggled but they still led the way for Total Spending to finish the year +0.5% vs 2019. 2021 has been even better. In June > October all major groups are positive vs both 2020 and 2019. The recovery has also become real for virtually all channels and monthly sales continue to set records. In fact, the current annual growth rates of +9.3% for Total retail and +10.4% for Relevant Retail are the best in history. Retail has recovered and continues to grow but we’ll keep checking.