Dropping prices cause dollar-sales to drop even if unit sales rise. Home Depot today blamed part of its revenue decline on lower prices.
By Wolf Richter for WOLF STREET.
Total retail sales, seasonally adjusted, rose 0.4% in April from March, and 1.6% from a year ago, even though many of the categories of goods that retailers sell have dropped in price, some on a month-to-month basis, others already on a year-over-year basis, as inflation has shifted to services.
Gasoline prices have plunged by over 12% from a year ago, even as the price ticked up in April from March. Sales at gas stations have plunged in lockstep with the price of gasoline (green-red chart below).
The food CPI dropped for the second month in a row, but is still up 7% from year ago.
Used vehicle prices have dropped nearly 7% from a year ago, despite the jump in April. New vehicle prices are still up 5.4% year-over-year, but fell in April from March.
These three categories – sales at food & beverage stores, motor vehicle & parts dealers, and gasoline stations – account for about 40% of total retail sales. Dropping prices translate into dropping sales, even when the retailer sells the same amount of goods.
The charts below show the three-month moving average to dodge the useless drama of the monthly ups and downs that obscure the trends. The three-month moving average dipped a hair for April as the big increase in January moved out of it, but was up 3.1% year-over-year.
The trend shows normal-ish sales growth in recent months, after the huge stimulus-induced spike in 2020 and early 2021 that was then further boosted through mid-2022 by the raging price increases that have now abated, with inflation having largely shifted to services, which retailers don’t sell.
Retail sales by category, 3-month moving average, seasonally adjusted.
New and Used Vehicle and Parts Dealers (19% of total retail sales):
- Sales: $130 billion
- From prior month: -1.0%
- Year-over-year: unchanged
- CPI used vehicles: +4.4% for the month, -6.6% year-over-year
- CPI new vehicles: -02% for the month, +5.4% year-over-year.
Ecommerce and other “nonstore retailers” (16% of total retail sales), ecommerce retailers, ecommerce operations of brick-and-mortar retailers, and stalls and markets:
- Sales: $112 billion
- From prior month: +0.8%
- Year-over-year: +8.0%
Food services and drinking places (13% of total retail), includes restaurants, cafeterias, bars, etc.
- Sales: $88 billion
- From prior month: -0.5%
- Year-over-year: +12.4%
- CPI for “food away from home”: +0.4% for the month, +8.6% year over year:
Food and Beverage Stores (12% of total retail):
- Sales: $82 billion
- From prior month: un changed%
- Year-over-year: +4.6%
- CPI for “food at home”: -0.2% month-to-month, +7.1% year over year:
General merchandise stores, without department stores (9% of total retail):
- Sales: $62 billion
- From prior month: +0.2%
- Year-over-year: +6.0%
Gas stations (8% of total retail):
- Sales: $55 billion
- From prior month: -1.1%
- Year-over-year: -9.9%
- CPI for gasoline: +3.0% for the month, -12.2% year over year:
This chart shows the relationship between the CPI for gasoline (green, right axis) and sales in billions of dollars at gas stations, including other merchandise gas stations sell (red, left axis):
Building materials, garden supply and equipment stores (6% of total retail). Home Depot falls into that category. Today it reported a 4.2% drop in revenues, and blamed part of it on falling prices, such as lumber.
And for regular readers of this monthly retail sales column, Home Depot’s revenue situation doesn’t come as a surprise. In the chart, this trend has been developing since late last year:
- Sales: $42 billion
- From prior month: -1.0%
- Year-over-year: -2.4%
Clothing and accessory stores (4% of total retail):
- Sales: $26 billion
- From prior month: -1.4%
- Year-over-year: -0.4%
- CPI apparel: +0.3% for the month, +3.6% year-over-year.
Miscellaneous store retailers, includes cannabis stores (2.3% of total retail): Specialty stores, from art-supply stores to wine-making supply stores. Cannabis stores are the growth driver.
- Sales: $15 billion, seasonally adjusted
- Month over month: unchanged.
- Year-over-year: +2.7%
There is no CPI for cannabis. Cannabis Benchmarks U.S. Spot Index reported that the average price in the US ticked up in recent weeks from the March low, but is still down by 16% year-over-year.
Furniture and home furnishing stores (1.7% of total retail):
- Sales: $11 billion, seasonally adjusted
- From prior month: -3.2%
- Year-over-year: 3.6%
- CPI Household furnishings: -0.4% for the month, +4.8% year-over-year.
Department stores (now down to 1.3% of total retail, from the 8% to 13% range in the 1990s, as consumers figured out how to buy the exact same stuff online, including at the ecommerce sites of the few surviving department store chains:
- Sales: $11 billion
- From prior month: -1.4%
- Year-over-year: +0.6%
- From peak in 2001: -40% despite 21 years of inflation.
Sporting goods, hobby, book and music stores (1.3% of total retail);
- Sales: $8.5 billion
- Month over month: -1.8%
- Year-over-year: -1.0%.
Electronics and appliance stores: Specialty electronics and appliance stores (Best Buy, Apple stores, etc.), not including electronics and appliance sales online and at other retailers.
- Sales: $7.7 billion, seasonally adjusted
- Month over month: -0.4%
- Year over year: -3.9%
- CPI consumer electronics: -0.1% for the month, -9.4% year over year.
- CPI appliances: -1.9% for the month, -0.4% year over year.
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