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 2020.
The road back has been long and complex. In addition, consumer spending behavior is continuing 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 new 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 August and then move to the Advance Report for September. It is important to note that the retail impact of the pandemic began in March 2020, peaked in April, then recovery started in May. The reports will enable us to compare 2021 to both 2020 and 2019 to document the progress that the retail market has made toward 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 – % & $ vs previous month
- Current Month change – % & $ vs same month in 2020 and 2019
- Current YTD change – % & $ vs 2020 and 2019
- Monthly and Year To Date $ will also be shown for each group/channel
First, the August Final. Retail hit bottom in April 2020 but began recovery, hitting record spending in December. Spending fell in January and February but set a new all time spending record in March. In April, spending fell but they rebounded in May to another record high. Sales have slowly declined through August. Here are the major retail groups.
(All spending numbers are actual, not seasonally adjusted)
The final total is $2.0 billion more than the Advance report projected a month ago. All groups were up slightly. The specifics were: Relevant Retail: +$0.7 billion; Gas Stations: +$0.6 billion; Auto: +$0.4 billion: Restaurants: +$0.3 billion. Sales vs July were down in all but Relevant Retail. Total Retail spending were the eighth highest month of all time. Total sales broke $600 billion for the first time in December and has now done it eight times. Auto still has the strongest recovery and is in fact prospering – annual YTD growth rate since 2019 is +11.9%. There were spending dips vs the previous month but for the third consecutive month, all groups were positive in all other measurements.
Now, let’s see how some Key Pet Relevant channels were doing in August.
- Overall – Five of 11 channels were down vs July but all were up vs August 2020 and 10 vs August 2019. In YTD spending, all were up vs 2020 and 10 vs 2019. August was the fourth 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. After slowing in July, spending increased in August. YTD they are +47.4% vs 2019, an Annual Growth Rate of 21.4%!
- Food & Drug – Supermarkets were +$77.7 billion in 2020. Spending is down vs July but YTD is on par with the 2020 binge. They are up 14% vs August 2019 and 14.3% vs YTD 2019. Drug Stores were +$17 billion (+5.7%) for 2020. They had a record March. Sales have been stable since then, but all other measurements are positive and YTD $ are +7.6%.
- General Merchandise Stores – Spending 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, +14% YTD. Dollar Stores and Clubs/Super Centers are leading the way with a combined growth rate of +8.5%. These channels promote value. Their success reinforces its importance to consumers. Also, Discount Department Stores are again back in the game.
- Office, Gift & Souvenir Stores– Spending increased slightly from July and were +20.5% vs August 2020. The pandemic hit them hard. They are still down vs 2019 – monthly and YTD. Recovery is a long way off, but things are improving.
- Internet/Mail Order – Their spending was up vs July as the pandemic continues to foster this channel’s growth. In August of 2019, their YTD growth was +13.9%. Now, their average growth rate is +19.6% – a 41.0% increase.
- 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 $). 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%. August spending was down slightly from July but still No. 4 of all time. YTD sales are +27.5% vs 2020 and +39.3% vs 2019. Very strong!
Relevant Retail began recovery in May and reached a record level in December. Spending fell in January and February, turned up again in March and began a monthly up/down rollercoaster. August spending is up and all channels but one is ahead of 2019 and 2020. The key drivers are the Internet, Super Centers/Clubs/Dollar Stores and Hardware/Farm.
Now, the Advance numbers for September.
Last year was memorable for both its traumas and triumphs. In April and May, we experienced the two 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 $600 billion 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 $633 billion. April sales were down slightly but they took off again in May to set yet another spending record, $643.1 billion. June>Sept spending fell but September was still the eighth biggest spending month in history. All major groups were down from August, but were positive in all other measurements for the fourth straight month. Some other areas of the economy are still suffering, some spending behavior has changed, and inflation has become a bigger factor in some 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 hit $633.1 billion, a record for the most spending in any month in any year. In April, sales dipped to $625.5 billion but were still $218.3 billion more than April 2020 – a record increase that was more than double the size of last year’s record drop. In May, sales set another new record, $643.1 billion. June>Sept sales dipped slightly and September was the third smallest month this year, which is normal. However, at $606.8 billion, it was still the eighth biggest month in history. Moreover, the current YTD average annual sales growth rate since 2019 is 9.2%, the highest ever in records going back to 1992. Total Retail has not just recovered. It is stronger than ever.
Restaurants – This group has no negative measurements vs 2020 or 2019 for four straight months. Last February 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 -$33.3 billion (-52.5%) compared to March 2019. Sales bottomed out in April at $30.1 billion, 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 were still strong vs 2019 & 2020. YTD spending is plus 30.5% vs 2020 and +4.1% 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 slowed only slightly in April>September as sales exceeded $122 billion in all seven months – the seven biggest months in history. To show how well consumers responded to their campaign you just need to look at the data. This group has exceeded $110 billion in monthly sales only 16 times in history. 13 of those occurred after the onset of the pandemic. YTD Average Annual Growth Since 2019 = +11.8% – 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 spending 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 are still +38% from 2020. They have been positive in all measurements vs 2019 & 2020 since March. Their comeback continues but there is another factor that must be considered – inflation. Gas prices can be pretty volatile. They dipped in the first two months of the pandemic but then returned to more normal levels for the balance of 2020. They began strongly inflating in 2021. In fact, September 2021 prices were 42.1% above 2020. That means that the 38.3% year over year $ lift in September was actually a decrease in the amount of gas sold. YTD Annual Growth Rate Since 2019 = +5.2%
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. When you look at the individual channels in this group, you see a variety of results due to many factors – 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 sales exceeded $400 billion for the first time ever in December ($407 billion). They finished 2020 up $260 billion, +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 but set monthly records. In March they turned sharply up and then down in April. They bounced back in May then fell in June and July. In August sales rose again but fell in September. However, we should note that while December 2020 is still No. 1, March > September are seven of the nine highest spending months of all time. The Relevant Retail Market has exceeded $361B in monthly sales nine times in history. Seven of those have occurred since the onset of the pandemic. It is also very important that the Relevant Retail group has posted positive numbers versus last year and YTD for every month since April 2020 and their average YTD growth rate since 2019 now stands at +10.4%. The recovery has become widespread as all channels have been positive in all measurements vs both 2020 and 2019 for 2 consecutive months. However, the primary drivers throughout the pandemic were and continue to be Non-Store, Grocery, Super Centers/Clubs/$ Stores plus an exceptionally long 2020 “spring lift” from Hardware/Farm and Sporting Goods.