Retail Sales Drop in February. But the big changes of the season caused them to jump. A Second Look

But what happened to food and drink stores?

By Wolf Richter for WOLF STREET.

Retail sales rise in December and fall in January and February, each year in different patterns. Major seasonal factors are used to reduce sales in December and increase sales in January and February, to balance them. And that was on full display today in January sales, reported by the Census Bureau today.

At some point, retail sales in February rose by 0.6% from January, to a record $738 billion (red line in the chart). On a seasonally adjusted basis, retail sales fell 3.1% in February from January, to $653 billion, the lowest since, well, February last year (blue in the chart).

But every year, retail sales rates have risen at the same solid rate: by 3.7% seasonally adjusted (SA) and by 3.6% seasonally unadjusted (NSA), a positive growth rate, not surprising, that exceeds the positive rate of the price of goods sold by retailers (the majority of retail sales are retail services).

Seasonal adjustments attempt to account for seasonal variations, such as weather, pre-holiday gift purchases, post-holiday gift returns, differences in the number of “business days” and other factors. The Census Bureau’s X-13 ARIMA-SEATS software program calculates these seasonal adjustments, based on more historical data.

But over a 12-month period, the seasonal adjustment factor reaches zero, so extreme change in some months leads to an explanation for lack of change in other months.

So we’re looking at long trends.

The largest groups of traders.

Commercial business and other non-retail retailers (18% of total retail sales) continued to increase market share, growing annually at nearly twice the rate of retail sales.

• SA: + 0.7% monthly, to $ 133 billion.
• NSA: -5.8% monthly, to $118 billion.
• Annually: +7.5%.

Cars and other car dealers (16% of total sales):

• SA: + 1.2% monthly, to $ 128 billion.
• NSA: +3.6% monthly, to $116 billion.
• Annual: +3.7%.

Food and beverage servicessuch as restaurants and bars (12% of total retail sales).

• SA: + 0.4% monthly, to $100 billion.
• NSA: -1.1% monthly, to $91 billion.
• Annual: +5.0%.

Food and Beverage Shops, such as supermarkets, grocery stores and specialty liquor stores (11% of total retail sales).

• SA: -1.1% monthly, to $84 billion.
• NSA: -9.9% monthly, to $76 billion.
• Annual: -0.3%.

The NSA’s -9.9% month-on-month decline in February at food and beverage outlets was larger than usual and resulted in a year-on-year decline (-0.3%) from the generally positive readings of previous months. So what happened to these stores in February?

It can be one month or renewable.

Or it could be a sign that supermarkets are losing market share at a faster rate to other retailers selling these goods. Food and beverage stores have been losing a lot of market share for years to other retailers, especially ecommerce and wholesalers like Walmart, the largest US retailer, and Costco.

When people buy food online, it is listed under ecommerce retailers; when people buy food at Walmart, Costco, Target, and other general merchandise stores, it is counted under “general merchandise retailers.”

It’s not that people are buying less food, it’s that they’re buying it from stores other than “food and beverage stores,” and that food and beverage stores are losing market share to those retailers.

In addition, the increasing sales of food wondered whether to go to restaurants, see the chart to the top.

Gas station sales (7.1% of total retail sales) moves closely with the price of gasoline. Gasoline prices started to rise in March. But in February, they were still soft after falling in January to their lowest level in years.

• SA: +0.9% monthly, to $52 billion.
• NSA: -3.4% monthly, to $45 billion.
• Annual: -0.7% inflation.

The chart below shows retail sales of gasoline (red), and the CPI for gasoline as a price index (dotted purple).

Stores for building materials, garden supplies and equipment (5.5% of total sales).

• SA: +0.4% monthly, to $41 billion.
• NSA: -3.0% monthly, to $33 billion.
• Annual: +3.7%.

Sales have been falling sharply since the Covid boom.

Health and personal care stores (5.5% of total sales).

• SA: +2.3% monthly, to $40 billion.
• NSA: -3.7% monthly, to $36 billion.
• Annually: + 2.5%.

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