Though many retailers across the grocery, restaurant, and fuel industries might be experiencing increases in unit sales or topline revenue, adjusting those figures for inflation often shows a less rosy picture. As it turns out, inflationary price hikes are driving many of these increases, creating an illusion of growth.

Declining inflation-adjusted sales are highlighted in Upside’s inaugural Consumer Spend Report. To dive deeper into the economic impact on retail and the reasons that revenue per transaction is falling across retail categories, continue reading here — or get your copy of the full report, featuring data from over a billion retail transactions and over 7,000 consumer survey responses.

The rise of cross-shopping

First, why might this phenomenon be occurring? Our report shows that the primary cause of stagnant or decreasing sales is the growing popularity of cross-shopping. With more options in more channels than ever before, today’s shoppers have the ability to spread their trips around to maximize the value they receive. The prevalence of cross-shopping has created a new paradigm, one that every retailer should be aware of: the uncommitted customer.

Today, these shoppers make up the majority of customers in America. Their willingness to spread around their trips means that they generally purchase less at each individual location. Thus, brick-and-mortar retailers are seeing lower-quality foot traffic and winning less of each customer’s wallet share.   

Inflation and retail sales numbers

How does the rise of the uncommitted customer align with the fact that many retailers are observing steady sales or even topline increases at the moment? When we look closer at inflation-adjusted sales, we start to see a clearer picture.

Grocery

In the spring of 2024, we observed that grocery sales were stagnating after months of fast, sustained growth at the height of the pandemic. Our latest analysis confirms the continuation of this trend. Year-over-year, inflation-adjusted revenue at grocery stores is holding relatively steady in June 2024; it’s actually slightly increased by less than a percent. 

When we extend the lookback window to two years, though, revenue is down more substantially — it has decreased by about 6% after adjusting for inflation.

Where grocers are really feeling the negative impacts of cross-shopping is in average inflation-adjusted revenue per transaction. When shoppers visit multiple stores each month for the grocery items they need, they naturally spend less at each store. That has resulted in a 3% year-over-year decrease in inflation-adjusted revenue per transaction as of June 2024. Compared to two years ago, we’re looking at a 7% decrease.

Fuel and c-store 

Last year, NACS reported that 66% of c-stores saw higher sales numbers year-over-year. But revenue increases don’t paint the full picture. Adjusting for inflation, c-store revenue was down 12% year-over-year in January 2024; compared to three years prior, it was down 19%. That’s largely because of c-stores’ declining foot traffic. Average daily transactions in January 2024 were down 12% year-over-year.

In fuel, unit sales are down, as well. According to OPIS data, fuel gallons sold in Q2 2024 were down 4% from one year ago and down 23% from five years ago.

Overall, c-stores have a unique and pressing problem that other retail categories do not: Many consumers regard them as inessential. Our respondents set low monthly budgets for c-store purchases — their average budget was $63 per month ($30 per month median), which was $74 lower than that of any other retail category. Furthermore, c-store has the largest percentage of respondents who actually stuck to that budget: 63% of c-store shoppers always kept their c-store spending under the monthly budget they set. 

Restaurant 

Restaurant goers have made it clear they’ve reached a breaking point on price increases. 

In the fall of 2023, Upside published a cost-passing analysis that showed price increases had pushed restaurant customers to trade down from full-service restaurants (FSRs), and year-over-year foot traffic for those restaurants was down about 4%. Quick-service restaurants (QSRs) and fast food chains were the beneficiaries of that shift, to the tune of a 3% increase in year-over-year foot traffic. 

Fast forward to today, and restaurant customers continue to trade down or out. But now last year’s winners are this year’s losers. We see evidence of that in our own data, but also in accounts from around the industry — McDonald’s Q2 2024 earnings report showed a decrease in global sales for the first time in more than three years. 

Across the QSR space, we’re now seeing decreases in sales year-over-year. The average daily revenue per restaurant, adjusted for inflation, was about 6% lower in June 2024 than it was one year prior. If we compare the current year to 2022, average daily revenue, adjusted for inflation, is about 10% lower now than it used to be.

We’re also seeing similar decreases in average revenue per transaction, indicating that not only are consumers visiting less frequently — they’re also trading down on the menu when they do. In June 2024, average inflation-adjusted revenue per transaction was 5% lower year-over-year, and it was 10% lower than 2022 levels.

Get more retailer revenue data

This data on inflation-adjusted sales comes from an excerpt from Upside’s inaugural Consumer Spend Report 2024. Get your copy of the full report.