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 November and then move to the Advance Retail Report for December. We will track the consumers’ evolving behavior in terms of channel migration but importantly, in this report, we will get the initial comparison between yearend $ for 2020 vs 2019.
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 2019
- Current YTD change – % & $ vs 2019
- Monthly and Year To Date $ will also be shown for each group/channel
First, the November Final. U.S. Retail hit bottom in April then began to recover. November $ were down from October, but still growing vs 2019. Here are the major retail groups. (The Data in all graphs is Actual, Not Seasonally Adjusted)
The final total is $2.7B less than the Advance report projected a month ago. The groups were up and down but most of the reduction came from Relevant Retail: -$3.0B; Restaurants: +$0.4B; Auto: -$0.3B; Gas Stations: +$0.2B. All groups but Relevant Retail were down after the October Total Retail $ peak. However, YTD Total $ales grew more positive vs 2019 thanks to another strong month from Relevant Retail and an OK month by Auto. The Auto segment is almost equal to 2019 $, but Restaurants and Gas Stations are down -$210B. Relevant Retail remains the only positive group in YTD sales.
Now, let’s see how some Key Pet Relevant channels were doing in November.
- Overall– $ in 6 of 11 groups were up vs October and 9 were up vs November 2019 and YTD. That’s pretty good.
- Building Material Stores – Their “Spring” lift continued through Summer and now into Fall. While sales peaked in June, they’re still showing double digit % increases vs 2019. Sporting Goods stores are not included in this group, but they have a similar Spring lift pattern. Their sales took off in May, peaked in June but have continued to grow vs 2019. In June, their YTD $ vs 2019 turned positive and by November they were up 15.4%.
- Food & Drug – Supermarket $ slowed in Aug/Sep turned up in October then flattened in November. They are +$71.6B YTD. Drug Stores $ dipped in August, grew in Sep/Oct, then fell again in November. They’re +$14B YTD.
- General Merchandise Stores – $ in Clubs/SuperCtrs slowed in September then grew in Oct/Nov. They are now +$30.8B vs 2019. $ Stores sales slowed from June>Sept but grew in Oct/Nov and are now +12.4% vs 2019. Discount Dept. store sales were slowing before the pandemic. This trend continues despite their November lift.
- Office, Gift & Souvenir Stores – A 28% drop after a 20% October lift . Recovery is long way off.
- Internet/Mail Order – The pandemic has accelerated this channel’s growth vs 2019. Sales hit another new peak in November. Many consumers have discovered online shopping and the behavior is likely to become habitual.
- 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. The others began reopening in May and the number grew in June which produced an increase vs 2019. Sales peaked in July but have remained stable and strong vs 2019. In fact, YTD sales are up +10.2%.
The recovery began in May and accelerated in June>July as even more businesses began to re-open. The Relevant Retail Segment was positive in all measurements in May>July. In Aug>Sept $ slowed but were still strong vs 2019. In Oct>Nov $ turned up and reached a new peak. The key drivers in the positive numbers vs 2019 remain the Internet, Supermarkets, SuperCtrs/Clubs/$ Stores and Hdwe/Farm. How are things progressing? Here are the Advance numbers for December.
April & May were the 2 biggest spending drops in history. In June, sales increased and continued to grow in July. $ fell in Aug/Sept. but in October, all groups spent more, turning YTD Total Retail positive for the 1st time since February. Sales dipped in November but not vs 2019 . In December, all groups spent more so the YTD Total Retail increase vs 2019 grew.
Total Retail – Total Retail spending hit a record $620B in December, up $74B from November and $28.7B from 2019. In February YTD 2020 sales were up $60B, +6.6%. Then came COVID-19. We hit bottom at -$112B YTD in May and began moving in the right direction. We broke even in October and are now up $40.2B, but still down -$20B from February.
Restaurants – Spending grew +$0.9B from November but was -$13.7B (-21%) below December 2019. Sales hit bottom in April due to forced closures. Re-openings began in May but have been mixed due to a virus resurgence. YTD $ales have stayed about 20% behind last year. January and February, normally the 2 slowest months, are on top in 2020. In February YTD sales were up $9B. They finished 2020 -$149B, (-19.5%). Delivery/pickup couldn’t make up the difference.
Automobile & Gas Stations – When you are staying home your car becomes less of a focus in your life. Auto Dealers began combating this attitude with fantastic deals and a lot of advertising. Monthly $ turned positive versus 2019 in June and have stayed that way. Sales dipped in November but rose spectacularly in December. They are now +1.1% YTD vs 2019. Gas Station $ales hit bottom in April and have been up and down ever since. However, YTD sales have remained consistently about 16% below 2019. At yearend they are -$79.6B (-15.9%). People are still not driving as much.
Relevant Retail – Less Auto, Gas and Restaurants – Many non-essential businesses shuttered their doors in March but there was a rash of binge/panic buying for “necessities”, especially groceries, which drove spending up $19B. April brought a full month of closures and an end in binge buying, spending dropped $34B from March. In May, the overall market began to reopen so spending began to move in the right direction and growth continued through July. $ales fell in Aug/Sept but turned up again in Oct/Nov. We should note that the monthly June>November $ were larger than all months in 2019 but December. In December 2020, spending skyrocketed, up $57B from November and $33B from 2019. The Relevant Retail group now has posted positive numbers versus last year and YTD for 8 consecutive months and is up $255.1B YTD (+6.9%) vs 2019. In May when the streak began, it was up +2.7%. The primary drivers were Nonstore, Grocery, SuperCenters/Clubs & $ Stores plus an “extended” spring lift from Hardware/Farm and Sporting Goods.
Now let’s look at what is happening in the individual retail channels across America. In December, consumer spending in the relevant retail market passed $400B for the first time. 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.
All 13 channels beat last months $. In November it was only 9. In September & October 10 channels beat the same month in 2019. This number dipped to 9 in November & December. In YTD $, 8 are showing an increase, the same as it’s been since September. The YTD decreases are coming from channels that are primarily nonessential businesses.
After April’s widespread closures there was a retail surge in May. Things truly opened up in June & July and sales continued to increase. In August/September, they slowed. Growth started again in October/November and took off in December. Relevant Retail is up $255.1B vs 2019. Essential channels are responsible for the YTD lift vs 2019, primarily:
- Nonstore Retailers – Even more consumers are online shopping.
- 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 – Sales slowed in April but came back in May and continue to grow vs 2019. This group turned the whole Gen Mdse channel positive. It clearly shows that value is still a consumer priority.
Regarding the Individual Large Channels
General Merchandise Stores – Sales grew vs November but not vs 2019 because Department Stores continue to fade, down -20% vs December 2019. Club/SuperCtr/$ stores are still the big positive force. In April consumers dialed back their panic buying and spending on discretionary items was also down significantly. Since May we have seen sales return to a more normal, strong pattern in these big and small value stores, including a 6% increase vs December 2019.
Food and Beverage, plus Health & Personal Care Stores – The Grocery segment is still strong and growing, +$76.4B YTD, due to the continuing big drop in restaurant sales. Monthly Sales increased in the Health, Personal Care group. Their $ have been up vs 2019 since June and YTD turned positive vs 2019 in August. Drug Store $ growth has been a key factor.
Clothing and Accessories; Electronic & Appliances; Home Furnishings – Except for September, monthly sales have grown every month since May. All groups increased sales vs November with Clothing & Accessories leading the way at +50.1%. All 3 channels are down significant percentages in YTD sales. Clothing Stores are the worst performers. In December they were down 12.1% vs December 2019 and 26.4% YTD. Together, these groups are down $91B vs 2019.
Building Material, Farm & Garden & Hardware – Sales peaked in late spring, as usual. However, this channel continues to benefit from consumers turning their focus to their home needs, including house and yard repair and improvements. This has extended their “Spring” lift indefinitely? $ were up 21.9% vs December 2019 and up +$53.7B (+14.0%) YTD.
Sporting Goods, Hobby and Book Stores – Book and Hobby stores are open and sales in Sporting Goods stores have taken off as Consumers are seeking more recreation. Sales exploded in December with the most monthly $ in 4 years, up 35.8% vs last month and 17.2% vs December 2019. In April, their YTD $ were -$3.4B. This deficit was wiped out in September and through December, YTD sales were +$5.7B (+4.5%). Their holiday lift far exceeded 2019.
All Miscellaneous Stores – This group is mostly small to medium specialty stores – both chains and independents. Pet Stores are 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 in May and grew through July when they finally beat the monthly sales for 2019. In Aug>Sept sales plateaued. They turned up in October, down in November, then up strong in December. In February, they were up $2.6B YTD. At yearend they are down -$1.6B, a difference of $4.2B. Recovery will have to come in 2021.
NonStore Retailers – 90% of the volume of this group comes from Internet/Mail Order/TV businesses. The COVID-19 crisis has only accelerated the ongoing movement to online retail. In February NonStore was up 8.6% YTD. In December monthly sales were the highest for any month in history and the 1st month to exceed $100B. They are now up 22.1%, +$176.0B YTD. Their increase is 69% of the total $ increase for Relevant Retail Channels. They are the clear leader, and their performance far exceeds their 12.9% annual increase in 2019. 2020 was a key waypoint for NonStore Retailers.
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 – April and May saw the 2 biggest year over year monthly sales declines in history. Restaurants, Auto and Gas Stations increased sales from May through July, but results have been mixed since then. All were down in September, up in October, down in November and finally up in December. The Auto segment passed 2019 YTD $ in December but Restaurants and Gas Stations are still struggling. The Relevant Retail segment has been the only true positive. Sales slowed in Aug>Sep. but then began grow again, hitting a record high in December. Their Monthly and YTD sales vs 2019 are now up for 8 consecutive months. Overall, they are +$255B YTD but for some segments in this group there is still a long way to go. Total Retail Sales peaked in December setting a new monthly $ record. In October Total Retail passed 2019 YTD $ and is now up +$40.2B (+0.6%) vs 2019. The growth has continued despite a surge in the virus. However, this will be a long battle. We will continue to monitor the data and provide you with regular updates.