Retail Sales & Raging Inflation

Ecommerce sales hit record. Sales at gas stations & electronics stores fell as prices fell. Used car dealers faced buyers’ strike, new car dealers supply shortages. Food store sales up on spiking prices.

By Wolf Richter for WOLF STREET.

First things first: Retail sales, reported today by the Commerce Department, are based on revenues, obtained via a survey of about 5,500 retail businesses, by retailer category. This is revenue data from retailers – from the company’s point of view, not from the consumer’s point of view. It’s an indication of how well revenues at these companies are doing. And in a moment, we’ll get into a gazillion of these revenue charts by retailer category.

“Retail sales” not “Consumer Spending”: The latter is reported about two weeks after retail sales, and my analysis of inflation-adjusted “real” consumer spending on durable goods, nondurable goods, and services is here. Through August, consumers have outspent inflation.

“Retail sales” here track sales of goods, not services, but the raging inflation has shifted from goods to services – and in services, inflation is raging at the worst rate since 1982.

Inflation raged in services and cooled in goods on a month-to-month basis in September. Food prices still jumped – and we’ll see that in the sales by grocery stores in a moment. But gasoline prices plunged, and so sales at gas stations fell. Used vehicle prices dropped, new vehicle prices rose but at a lower rate. Prices of electronics plunged. The CPI for durable goods – new and used vehicles, appliances, consumer electronics, sporting goods, furniture, etc. – dipped in September from August (all my inflation details are here). For many retailers, price increases are now harder to push through and make stick.

So overall CPI rate cannot be applied to retail sales. Even if you try to apply the CPI of various goods categories to retail sales, you will run aground because retail sales go by category of retailer, not by product category, such as “general merchandise retailer,” which includes Walmart, which sells a vast array of product categories. A few retailer categories are close to product categories, such as “new and used auto and parts dealers,” or “food services and drinking places,” or “gasoline stations.” But gasoline stations sell all kinds of other products, including sodas and junk food, and the retail sales category of “gasoline stations” counts sales of all products, not just gasoline.

After price drops in many categories of goods, total retail sales remained flat in September from August, at $ 684 billion, seasonally adjusted, and were up 8.2% from a year ago. Compared to September 2019, retail sales were up a mind-boggling 32%.

Sales at New and Used Vehicle and Parts Dealers, the largest category, edged down by 0.4% in September from August, to $ 128 billion, seasonally adjusted, but was up by 5.6% from a year ago, and by 23% from September 2019.

The sales increases since 2019 come from much higher prices of new and used vehicles, on much lower volume as the industry has had huge supply problems.

Used vehicle prices have dropped from their crazy spike, and there is now plenty of supply on dealer lots as price resistance has finally set in. The number of used vehicles sold is down about 15% from 2019.

New vehicle prices continued to surge in September. Inventories of full-size trucks, which were depleted last year and earlier this year, are rising, and some dealers are overstocked, and are slapping on big discounts. Smaller vehicles with good fuel economy have sold out, and there are long waiting lists, including for EVs. So new vehicle unit sales – down 19% in Q3 from Q3 2019 – are not yet constrained by demand but by supply.

Sales at ecommerce and other “nonstore retailers” rose 0.5% to a new record of $ 109 billion, seasonally adjusted, up by 11.6% year-over-year and up by 71% from September 2019, as the shift in sales from brick-and-mortar stores to online sites continued relentlessly.

Included here are sales by the ecommerce operations of brick-and-mortar retailers, and by stalls and markets:

Food and Beverage Stores: Sales, at $ 79 billion, were up 0.4% for the month, when the CPI for “food at home” – which largely reflects food bought at grocery stores – rose by 0.7%. Year-over-year, sales rose by 6.4%, about half the rate of CPI for “food at home” (13%). Compared to September 2019, sales jumped by 24%:

Food services and drinking places: Sales rose by 0.5% in September from August, and by 11.4% year-over-year, to a record $ 87 billion. This increase largely reflects inflation: The CPI for “food away from home” – restaurants, vending machines, cafeterias, sandwich shops, etc. – jumped by 0.9% in September from August, and by 8.5% year-over-year, the worst since September 1981.

Compared to September 2019, sales were up 33%.

General merchandise stores: Sales rose 0.6% for the month, and 4.1% year-over-year, to $ 59 billion, up by 21% from September 2019. Walmart and Target are in this category, but not department stores:

Gas stations: Sales fell 1.4% for the month, the third monthly drop in a row, to $ 63 billion, the lowest since February, as the CPI for gasoline has plunged for the third month in a row, and is down by 24% from the peak in June. Sales were still up by 21% from a year ago, and by 48% from September 2019.

Sales at gas stations include all the other goods they’re selling, such as food, beverages, motor oil, and other stuff. The price drop in gasoline may have been moderated by price increases in this other stuff.

Building materials, garden supply and equipment stores: Sales dipped 0.4% for the month to $ 43 billion, but were up 9.7% year-over-year, and 38% from September 2019:

Clothing and accessory stores: Sales rose 0.5% for the month and 6.4% year-over-year, to $ 26 billion, up 18% from September 2019:

Miscellaneous store retailers (includes cannabis stores): Sales fell by 2.5% for the month, to $ 15.6 billion, but were up 8.2% year-over-year, and 41% from September 2019:

Furniture and home furnishing stores: Sales fell 0.7% for the month to $ 12 billion, and were up less than 1% year-over-year. Compared to September 2019, sales were up 17%:

Department stores: Sales rose by 1.3% for the month, to $ 11.6 billion, and were up 1.8% year-over-year, and 4.8% from September 2019, as big price increases pushed up sales.

Since 2000, sales were down 42%. Department store sales have moved from mall stores to the internet, including at the ecommerce sites of the few surviving department store chains:

Countless department stores and department store chains, from Sears on down, filed for bankruptcy and were mostly liquidated. Department stores were once upon a time the iconic place where Americans shopped. Today, only a small number of chains survive, such as Macy’s, and even they have been closing lots of stores every year for many years, and lots of malls, those that haven’t been shuttered yet, have boarded-up department stores as anchors.

Americans have found out that anything you can buy at a brick-and-mortar department store, can be bought online, including at that chain’s website.

Back in the early 1990s, department stores sales accounted for around 10% of total retail sales. By February 2020, just before the pandemic, they accounted for 2.4%. In September 2022, they accounted for only 1.9%. On track to irrelevancy:

Sporting goods, hobbies, book and music stores: Sales fell 0.7% for the month, to $ 9.2 billion, but were up 3.7% year-over-year. The CPI for sporting goods rose for the month but was down 1.1% year-over-year. Compared to September 2019, sales were up 38%:

Electronics and appliance stores: Sales fell 0.8% for the month, and by 8.6% year-over-year, to $ 7.4 billion, and where down even from September 2019. Retailers in this category are dealing with price drops that are particularly steep for consumer electronics. In September:

  • CPI consumer electronics: -0.6% month-to-month; -10% year-over-year.
  • CPI appliances: -0.3% month-to-month, + 1.7% year-over-year

In this category are only specialty electronics and appliance stores, such as Best Buy’s brick-and-mortar stores or Apple’s brick-and-mortar stores. It does not cover the electronics and appliance sales at other retailers, such as Walmart, and it does not cover ecommerce sales of electronics and appliances:

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