Time for our monthly update on U.S. retail sales by channel. The current COVID-19 crisis has caused turmoil in the Retail Marketplace. Consumer spending behavior has changed and continues to evolve. In this report we will track the changes and migration between channels. We will do that 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 – approximately 2 weeks after month end. The Monthly Final 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 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 look at the latest release of both reports. We will begin with the Final Retail Report from January and then move to the Advance Retail Report for February. Remember, January and February 2020 were pre-pandemic, but we will continue our detailed comparison of 2021 to both 2020 and 2019 to track the ongoing evolution of the retail market.
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 January Final. U.S. Retail hit bottom in April then began to recover, hitting record $ in December. January $ fell but still set a monthly record. Here are the major retail groups. (Data in all graphs is Actual, Not Seasonally Adjusted)
The final total is $9.8B more than the Advance report projected a month ago. All Groups were up but most of the positive change came from Relevant Retail: +$6.2B; Restaurants: +$0.9B; Auto: +$1.8B; Gas Stations: +$1.0B. Only Gas Stations and Restaurants were up vs December, but Total Retail still set a January record. Total $ales finished strong in December and had a good start in 2021 thanks to another strong month from Relevant Retail and Auto. Restaurants and Gas Stations continue to struggle. Relevant Retail is still the driving force in the recovery.
Now, let’s see how some Key Pet Relevant channels were doing in January.
- Overall– All 11 channels were down vs December, but 10 of 11 were up both vs 2020 and 2019. A great start.
- Building Material Stores – Their lift continued into the new year. We should note that the bulk of the ongoing surge came as a result of pandemic spending patterns developed in 2020. They’re still showing double digit % increases. Sporting Goods stores are not in this group, but they have a similar spending pattern. Sales took off in May, hitting a record peak in December. The lift continued in 2021 – up 36.2% over 2019 and 44.4% over 2020.
- Food & Drug – Supermarkets finished 2020 up +$77.7B. Sales dipped slightly in January but are still +10.9% vs 2020. Drug Stores ended up +$17B (+5.7%) for 2020. Their $ also fell in January but are still +4.5% vs 2020.
- General Merchandise Stores – $ in all channels fell a lot from December. However, Clubs/SuperCtrs, $ Stores and even Discount Dept. Stores had a strong January. Last year they were up a combined $1.5B from 2019. This year they are up $7.2B from 2020. Value has become even more important due to the pandemic.
- Office, Gift & Souvenir Stores– Sales plummeted in January. Their struggles continue. Recovery is a long way off.
- Internet/Mail Order – The pandemic has accelerated this channel’s growth. In January they were up $22.1B (+42.8%) vs 2019. 78.7% of that growth (+$17.4B) came from the pandemic lift spending pattern set in 2020.
- 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 to 24% of total $). Pet Stores were usually essential, but most stores were not. Stores began reopening in May and the $ grew. Their 2020 total sales were up +11.6%. January sales are +$1.0B (+14.4%) vs 2020. However, that is less than last year when they were +$1.2B (+21%) vs 2019.
The Relevant Retail Segment began recovery in May and reached a record level in December. $ plummeted in January but still set a monthly record. The key drivers in the continued strong growth of this group were and are the Internet, Supermarkets, SuperCtrs/Clubs/$ Stores and Hdwe/Farm. Now, here are the Advance numbers for February.
2020 will always be a memorable year for both its traumas and triumphs. In April & May we experienced the 2 biggest retail spending drops in history. Then sales began to recover and in October YTD Total Retail turned positive for the 1st time since February. In December, Total Retail broke the $600B barrier – a historic first. Monthly sales records continued in January and now February. The primary drivers of this are Relevant Retail and Auto. Restaurants are the only big group still suffering across the board. As we progressed through 2020 and now into 2021, we have seen real evidence of the strength and resiliency of the U.S. Retail Market.
Total Retail – Spending fell in February but still was a record high for the month. $ were up 2.4% vs 2020 but 10.7% vs 2019. Most of the lift came last year. YTD $ are also showing strength but this was mainly due to a spectacular January.
Restaurants – This is the only group in which spending was down in all measurements. Last February sales were up vs January and February 2019. The Pandemic changed that. YTD sales are also down -10.7% from 2019. However, this was primarily due to the -$12.7B drop in February $ from 2020. Recovery is still a long way off.
Automobile & Gas Stations – Staying home causes your car to be less of a focus in your life. Auto Dealers combated this 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. Gas Station $ales are a mixed bag. They were still behind 2020 in February and YTD but ahead of 2019 sales in both measurements. It looks like they are beginning their comeback.
Relevant Retail – Less Auto, Gas and Restaurants – 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 was down vs 2019. Monthly $ales exceeded $400B for the first time ever in December ($411B). They finished 2020 up $251B, +6.8%. Sales fell in January but have continued to set monthly records through February. They are up $20.4B, +7.2% vs February 2020 and +$57.9B, +10.1% YTD. Relevant Retail has now posted positive numbers versus last year and YTD for 10 consecutive months and their average YTD growth rate since 2019 now stands at +7.8%. The primary drivers continue to be Nonstore, Grocery, SuperCenters/Clubs/$ Stores plus a never ending “spring lift” from Hardware/Farm and Sporting Goods.
Now let’s look at what is happening in the individual retail channels. Relevant retail was down vs January but continues to set monthly sales records. Let’s see where the $ came from. These groups are less defined than in the Final Monthly reports and we will look across the whole market, not just pet relevant outlets. We will continue to track 2021 monthly and YTD sales vs both 2020 and 2019.
Sales in 12 of 13 channels were down vs January. 8 channels beat February 2020 $ and 10 beat February 2019 $. In YTD $ales, 10 channels beat both 2020 and 2019.
After April’s widespread closures there was a retail surge in May, but things truly opened up in June/July. In Aug/Sept, sales slowed but growth began again in October and peaked with a record December. Relevant Retail finished +$252.9B vs 2019 and has started 2021 strong, +10.1% YTD. Essential channels are responsible for the continued lift, primarily:
- Nonstore Retailers – Online shopping continues to grow in households and $.
- Food & Beverage, especially Grocery– Restaurant $ are still down so consumers continue to eat & drink at home.
- Bldg Materials/Garden/Farm– Their “Spring” lift continues unabated as consumers focus on their home.
- SuperCtrs/Club/Value/$ Strs – In 2020 they kept the whole Gen Mdse channel positive. Their growth slowed in February but their continued success clearly shows that value is still a major consumer priority.
Regarding the Individual Large Channels
General Merchandise Stores – Sales dropped so much from January that they were down vs February 2020. This was due to the continued negative performance by Department Stores and slowed growth by Club/SuperCtr/$ stores, +3.6% in February, down from +9.6% in January.
Food and Beverage, plus Health & Personal Care Stores – In February, growth slowed to +6.7% in the Grocery segment, compared to +11.3% in January. Sales in the Health, Personal Care group finished 2020 at +1.7%. They started 2021 even better, +3.3% in January, but that slowed to +2.4% in February. Drug Store $ remains the key to health/personal care.
Clothing and Accessories; Electronic & Appliances; Home Furnishings – Home Furnishings began their recovery in January and are now positive in both monthly and YTD $ vs 2020 and 2019. Electronic & Appliance stores remain negative across the board, but the gap is narrowing. Clothing Stores continue to be hard hit by the pandemic, but they were the only channel to increase sales vs January. There is still hope.
Building Material, Farm & Garden & Hardware – Their Spring lift began on time in 2020 and it has essentially never stopped. They have greatly benefited from consumers turning their focus to their home needs. They finished 2020 +53B (+13.8%). In February they were up 11.1% vs 2020 and +13.1% YTD.
Sporting Goods, Hobby and Book Stores – Book and Hobby stores are open but make no mistake, 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. Sales fell in February after a record January performance, but they were still +11.0% vs February 2020 and +17.8% YTD.
All Miscellaneous Stores – Pet Stores are in this group and deemed essential but most other stores are 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 down $1.0B, -0.7%. January sales were +6.9% vs 2020 but February sales were actually down -0.01% vs 2020. Their $ are +2.5% YTD so they are recovering but it may not be a fast process.
NonStore Retailers – 90% of the volume of this group comes from Internet/Mail Order/TV businesses. The COVID-19 crisis accelerated the movement to online retail. In February 2020 NonStore $ were 8.6% YTD. In December monthly sales exceeded $100B for the 1st time. They ended 2020 at +21.9%, +$173.9B YTD. Their increase was 69% of the total $ increase for Relevant Retail Channels. Their 2020 performance far exceeded their 12.9% increase in 2019 and they started off 2021 even better. February is +23.5% vs 2020 and YTD $ are +25.4%. Remember, this is their slowest season.
Note: Almost without exception, online sales by brick ‘n mortar retailers are recorded along with their store sales in their regular channel. Whether they are up or down, their online sales are included in the totals.
Recap – 2020 was a year of ups and downs – April and May were the 2 biggest year over year monthly sales declines in history while December saw sales break $600B for the first time. Restaurants, Auto and Gas stations were impacted the most. Auto had recovered by yearend and started 2021 out strong. Gas Stations had a terrible 2020 but are now showing mixed results in 2021. Restaurants continue to show the most negative impact from the pandemic. The Relevant Retail segment has been the only ongoing positive, but for some segments in this group there is still a long way to go. Total Retail Sales ended the year +$37B (+0.6%) vs 2019. Through February Relevant Retail and Auto are both +10% vs 2020, which has pushed Total Retail to +5.1%. For Gas Stations and especially Restaurants the problems continue. As the battle to return to normal goes on, we will continue to provide regular updates. The March data should be especially interesting as we will compare 2021 to 2020 (Pandemic Impact Begins) and to 2019 (Old Normal).