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Mixed Trends in Canadian Retail Sales in Spring 2022: Strapagiel

By
Ed Strapagiel
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How good or how bad things are in Canadian retail depends on what you’re selling. At the total level, sales were up 8.5% year-over-year for the 3 months ending January 2022, a significant improvement over pre-pandemic growth trends. But this result is an overall average which doesn’t well describe any one retail sector or store type.

Another matter is that total Canadian retail sales are being shored up by unusually high gains in the Automotive & Related sector, mostly thanks to rapidly increasing gas prices. For Store Retail (Food & Drug plus Store Merchandise, excluding Automotive), the picture is more subdued.

In this case, sales were up a more modest 5.6% for the 3 months ending January 2022, and the underlying 12 month trend (green line in the chart) has been softening for about the last 9 months.

Food & Drug

The Food & Drug sector spent most of last year suffering from slowing sales growth, and this trend appears to be continuing. For the 3 months ending January 2022, retail sales were actually down 1.1% year-over-year. The underlying 12 month growth trend barely kept its head above water with a gain of just 0.3%.

Grocery stores are the largest subgroup in this sector, and their last 3 months retail sales declined 2.4% year-over-year in January 2022 despite high food price inflation. Convenience stores however suffered the most, with sales down 10.5% during the period.

Health & personal care stores had put up some good numbers in 2021, but now the bloom seems to be off this rose too. Their retail sales were up just 0.5% for the 3 months ending January 2022.

Store Merchandise

In sharp contrast to Food & Drug, the Store Merchandise sector appears to be doing quite well. Retail sales were up 11.4% year-over-year for the 3 months ending January 2022. The underlying 12 month trend gained 14.1%, a 5-year record high. Of course, much of this may be a rebound from the year before when sales were depressed by COVID.

A number of store types in this sector are enjoying significant sales increases. Clothing & clothing accessories stores’ retail sales were up a scorching 33.4% for the 3 months ending January 2022, while general merchandise stores gained 12.5%. Only electronics & appliance stores had a decline, with sales down 4.5% during the period.

Automotive & Related

The Automotive & Related sector had the highest year-over-year retail sales gain for the 3 months ending January 2022 at 15.2%. This was as a result of a strong gain in vehicle sales coupled with a huge increase in gasoline station sales.

New car dealers’ sales gained 8.5% during the period, an improvement over recent performance. There are supply issues so it’s difficult to know how long this will last. The big winner in vehicles however is used car dealers, whose sales increased by 16.4% for the 3 months ending January 2022.

Gasoline station sales have been rapidly increasing since the spring of 2021, usually by moderately high double-digits. Their sales were up 34.7% year-over-year for the 3 months ending January 2022. This is due to the runaway price of gas, as anyone filling their tank recently may have noticed.

By The Numbers

Note that the data and analysis in this report are always based on not seasonally adjusted (or unadjusted) retail sales statistics.

For definitions of store types, see Statistics Canada NAICS.

Canadian E-Commerce Sales

Canadian e-commerce retail sales made huge gains during the height of the COVID epidemic. Many consumers went online and stayed away from stores (and each other). This has now stalled with recent sales gain hovering around the 0% mark. For the 3 months ending January 2022, sales actually declined 7.3%.

Overall, e-commerce represented about 6.2% of retail sales over the past 12 months, according to Statistics Canada, including both pure plays as well as bricks & clicks stores. Note that Canadian consumers may also buy online from foreign websites which is not captured in these numbers.

Location based retail is the same as that in the preceding “By The Numbers” table. It’s what’s normally reported as Canadian retail sales. Except that it isn’t. Location based retail excludes another section called Non-Store Retailers (NAICS code 454), which includes electronic shopping and mail-order houses, which in turn is where (mostly) pure play e-commerce businesses are. For the 12 months ending anuary 2022, electronic shopping and mail-order houses had an estimated $26.8 billion in e-commerce sales.

But that’s not the only source of e-commerce, as (mostly) bricks & mortar location-based retailers also sell online. This group had an estimated $16.7 billion in e-commerce sales during the period. With electronic shopping and mail-order houses, there’s a grand total of $43.5 billion in e-commerce sales by Canadian operators. Note that this does not include foreign e-commerce purchases made by Canadian consumers, but it does include e-commerce purchases made by foreigners at Canadian operations.

For electronic shopping and mail-order houses, an estimated 96.0% of their sales are currently allocated to e-commerce. For (mostly) bricks & mortar retailers, it can be estimated that 2.5% of their total sales are attributable to e-commerce.

In the final section of the above table, (mostly) pure play operators (namely, under electronic shopping and mail-order houses) generated an estimated 61.6% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers’ share of e-commerce was 38.4%.

For more explanation on the e-commerce numbers, see Statistics Canada: Retail E-commerce in Canada.

Monthly Update Notification

This analysis is updated monthly as new numbers are published by Statistics Canada. If you would like notification from Linkedin of when an update becomes available (and you’ve read this far), please connect with Ed Strapagiel on LinkedIn.

Canadian Retail News From Around The Web For March 24th, 2022

By
Retail Insider
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Canadian Retail News From Around The Web

News at a Glance

Retail Insider is streamlining its Canadian retail news from around the web to include a handful of top news stories that can be viewed quickly during the day. Here are the top stories from the past 24 hours.

Melissa Newton, Chair of Consumer Real Estate Canada, Discusses COVID’s Impact 2 Years In: Video Interview

By
Mario Toneguzzi
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Melissa Newton, Chair of Consumer Real Estate Canada, Discusses COVID's Impact 2 Years In: Video Interview

Melissa Newton, Chair, Consumer Real Estate Canada, discusses how the retail sector has displayed resilience even in these tough economic times. That includes fewer businesses shutting down than expected, fewer physical retail vacancies and robust consumer spending predicted as we head into the spring.

Newton also discusses the founding of Consumer Real Estate Canada which came about as a communications source in early 2020.

The Video Interview Series by Retail Insider is available on YouTube.

Connect with Mario Toneguzzi, a veteran of the media industry for more than 40 years and named in 2021 a Top Ten Business Journalist in the world and the only Canadian – to learn how you can tell your story, share your message and amplify it to a wide audience. He is Senior National Business Journalist with Retail Insider and owner of Mario Toneguzzi Communications Inc. and can be reached at mdtoneguzzi@gmail.com

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Shoppers World in Brampton ON to be Transformed into Mixed-Use Community: Interview

By
Mario Toneguzzi
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The master plan includes the conveyance of private land to public use, including dedicated land for a new urban community hub in Brampton. (Image Courtesy of BDP Quadrangle / SvN Architects + Planners)

Real estate developer and owner RioCan has a vision to transform Shoppers World Brampton into a sustainable, transit-oriented, pedestrian-friendly community and revitalize the retail offerings to create a model mixed-used community for the 21st century.

John Ballantyne, Chief Operating Officer at RioCan Real Estate Investment Trust, said the project is a 20-year development.

John Ballantyne

“We’re contemplating the first step of it right now. We’ve got approvals to build quite a lot but it’s going to depend on how each respective phase performs,” he said.

“RioCan’s model is we’ve always been a retail landlord. We’ve always owned unenclosed centres located across Canada. About five years ago we made a concerted effort to be more in the primary markets of Canada. So we sold most of our secondary market assets because we know the growth is in the primary markets.

Shopper’s World Brampton was first redeveloped from a farmer’s field into a shopping destination and Brampton’s first enclosed mall in the 1960s. Today, Shoppers World Brampton is home to over 140 stores, 3,000 parking spots and approximately 700,000 square feet of retail space. (Image Credit: SkyGuys)

“This site is a great example of that where there’s an LRT coming to this site. It’s going to be the terminus station of the LRT. It’s going to end at the shopping centre and we understand there’s a need for new homes in Canada. This is an ideal opportunity to combine the two – our retail prowess along with our residential banner RioCan Living to add residential intensification to the site.”

Ballantyne said the site has been planned and the owner has rights to build four million square feet of mixed-use density. That could be up to 4,500 residential units – both rental and condominium. It would also mean about 860,000 square feet of commercial with retail a strong component but it  would include office space and perhaps educational, medical, and a wide gamut of uses.

The site is 53 acres and the shopping centre is currently about 690,000 square feet – a combination of a mall which is grocery anchored but including box stores around the site. RioCan has owned the property for more than 20 years.

“Brampton is one of the fastest growing cities in Canada,” said Ballantyne. 

Looking beyond the boundaries of the site, the designers took inspiration from Brampton’s natural ecology to guide the identity of the new mixed-use development, restitching it to two watersheds that surround the site (From Etobicoke Creek to Fletchers Creek, and Oak Ridge Moraine to Lake Ontario. (Image Courtesy of BDP Quadrangle / SvN Architects + Planners)

“This one will be phased over the next 20 some odd years. The first component of the development that we’re considering is building a couple of towers on Steeles Avenue. There’s actually an old bus station . . . The former bus station is now in a vacant corner in the southwest portion of the site. We’re considering putting two towers up on that. They would be in the range of about 30 storeys each. We could do that without touching the existing mall. So Shoppers World Brampton would remain as is while we build out those two multi-family buildings.”

Ballantyne said residential is a huge amenity to the sites RioCan owns. It’s basically building in a consumer base to the existing retail.

“The country is trying to solve an issue of not enough homes for Canadians. We’re going to have 1.2 million new Canadians in this country over the next three years. We’ve already had a third of those come in this year. So we’ve had about 400,000 new immigrants come to Canada. We need space for them,” he said.

“It’s especially sites like this that are transit-oriented, urban high population areas with existing infrastructure built all around them, schools, parks, shopping centres, community, extremely important. What we’re doing through RioCan is obviously we’re adding this residential component but we’re also making our site more community friendly.

“Part of what RioCan Living does is we accommodate the communities that we put these residential towers into. Not only for the retail that accompanies it but we’ll do not-for-profit daycare, we’ll do green space, we’ll do community centres in certain mixed-use complexes. We want this to be an active part of the community that they’re going in. We don’t want to just plop towers in the middle of a shopping centre parking lot. That’s not the intent. The intent is to build a true mixed-use community.”

Lined with publicly accessible, diverse open space and a bosque of trees, the pedestrian promenade is a unique landscape feature which creates a connection between Etobicoke Creek and the new urban centre. (Image Courtesy of BDP Quadrangle / SvN Architects + Planners)

Shonda Wang, Principal at SvN who is working with RioCan on designing the new Shoppers World Brampton site alongside lead architect BDP Quadrangle, said the company’s work focuses on solving the critical urban issues of our time.

Shonda Wang

“Today, and for some time now and for some time to come, that focus has been on housing and mobility, and also really designing and developing the supportive communities that are needed in the context of a rapidly growing region – one of the fastest growing regions in North America,” she said. 

The company started working with RioCan in 2017 on the Brampton site to look at what the redevelopment site’s potential would be. The mall is surrounded by high traffic roadways.

“It’s a really important commercial hub today. The community since the 1960s has really been going there as their mall site for various amenities and activities but it’s challenged because it’s hard to access except within a car-dominated environment,” she said. 

But with the coming LRT line, this is a tremendous opportunity to leverage the investments in transit and introduce different types of housing and amenities.

SvN has supported RioCan by bringing the site through a master-plan process. 

A series of new streets, parks and open spaces will form the foundation to introduce a mix of types and tenure of housing. The streets will be new walkable and bikeable streets and community services and facilities will be introduced in a dynamic mix.

“We’re seeing a lot of malls and shopping plazas across the GTA and other jurisdictions being replaced by mixed-use communities,” said Wang. “We’re one of the fastest growing regions in North America. That’s a big driver for growth and development and large-scale sites like Shoppers World tend to transform more readily than fragmented, multi-owner sites that need to be assembled.

“There’s a recognition and realization that building for singular use in this context is rarely a good approach for redevelopment when you have very precious land assets. I mean that not only from an environmental perspective but also an economic perspective. RioCan’s been fantastic at acknowledging and recognizing that and therefore proactively planning for their sites.”

Wang said the interesting thing about the Shoppers World Brampton site is that it is dominated by asphalt today. The master plan ended up showing how the asphalt could be lifted and peeled away to uncover what was there originally.

“Because this site is going to be transformed over so many years, it was really important for us to develop a strong landscape narrative as part of the vision,” she said.

Canada’s Biggest Franchise Exhibition, The Franchise Canada Show, Returns In-Person This Weekend

By
Mario Toneguzzi
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Franchise Canada Show - Toronto

The franchise industry in Canada has seen explosive growth in recent  years as more Canadians look to become entrepreneurs and more brands seek a proven way of expanding their business presence across the country.

The upcoming Franchise Canada Show Toronto, put on by the Canadian Franchise Association (CFA), is intended to help both realize their dreams through the successful franchising model, which contributes over $100 billion per year to the Canadian economy and creates jobs for over 1.9 million Canadians.

Kenny Chan

Kenny Chan, Vice President, Content & Marketing, Canadian Franchise Association, said the Show answers the call of aspiring entrepreneurs by providing attendees with the opportunities to speak with more than 50 brands and learn from industry experts to gain the knowledge needed to take the first step towards becoming their own boss through franchising.

“It’s the place to go to learn everything you need to know in order to open a franchise successfully,” said Chan.

He said topics covered this year include: How to Select the Right Franchise For You; Fundamentals of Franchise Financing; What Makes a Good Franchise; How to be a Rockstar Woman in a Leadership Position; and, Move Over Millennials – Reaching the Next Generation of Franchisees.

“It’s a one-stop shop for anybody who wants to own their own business,” added Chan.

The Franchise Canada Show is taking place March 26-27 at The International Centre in Toronto. More information can be found here.

Attendees will have the opportunity to meet with franchising professionals, hear success stories from successful franchisees, and attend a variety of free panel discussions to help them on their next career path.

Franchising has garnered the attention of entrepreneurs looking to become their own boss while still maintaining the support of a proven franchise model to take away a lot of the uncertainty. 

“Franchising continues to remain strong. As of our last economic impact report, franchising is the 12th largest industry in Canada and contributes over $100 billion to the Canadian economy each year,” said Chan. “Franchising, because it’s a business model, can be found in every sector and industry of business. It’s not just restaurants. It’s also retail. It’s business services. It’s education. It’s automotive. If you can think of an industry, there’s a franchise within it,” said Chan.

“Franchisees are small business owners in their local communities. Altogether, franchising creates jobs for almost two million Canadians. There are over 13,000 franchise brands operating right now in Canada and they range in terms of investment from under $5,000 to over $5 million. It all depends on what kind of franchise it is. With the breadth and depths of diversity in concepts and price points, there really is a franchise for everyone.”

The Franchise Canada Show is the official show of the CFA, a national, not-for-profit association of more than 600 corporate members representing over 40,000 franchise business owners. It began in 1996.

Canadian franchises enable over 76,000 Canadians to be their own boss as the owner of their own small business franchise location.

“With the pandemic and COVID, franchising like every sector in business, was impacted. However, franchising historically booms during times of economic downturns or recessions,” said Chan.

“If you look at the Great Recession of the late 2000s, in Canada we saw a growth in franchising with the number of locations within franchising of 6.5 per cent between 2008 and 2010. And on top of that, historically we see a growth in the number of non-franchised businesses adopting the franchise business model, with a growth of 23 per cent of new brands operating in franchising from 2008 – 2010. Today, we are seeing continued interest from Canadians to own a business. We know that, through the pandemic, interest in self-employment was up 700 per cent with online searches.” 

Franchise Canada Show – Toronto
Franchise Canada Show – Toronto

Franchise Canada Shows will also take place this year in Montreal, Calgary, Vancouver with a second Show in Toronto in the fall. More information can be found here. 

Sherry McNeil

Throughout the year, the CFA also holds virtual trade shows that are open to all of Canada.

“Since 1996, the Franchise Canada Show has helped thousands of Canadians realize their dreams of building their own successful business through franchising,” said Sherry McNeil, President & CEO at the CFA. “The franchise business model is uniquely positioned to help you get in business for yourself but not by yourself. The upcoming, in-person show is the perfect opportunity to see if franchising is right for you.

“As Canada’s ultimate franchise exhibition and the official show of the Canadian Franchise Association, this is the place to meet face-to-face with leading franchisors, connect with industry experts, attend free seminars, and explore franchise opportunities in every industry and at all investment levels.”

*Franchise Canada Show sponsored this post. To attend it this weekend, register here.

West Edmonton Mall Looking to Add More Luxury Retailers After Seeing Success with 3 Big Players

By
Craig Patterson
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Louis Vuitton at West Edmonton Mall. Photo: Louis Vuitton

It turns out that Edmonton is a market for luxury retail. Three major players opened stores at West Edmonton Mall since the summer of 2019 and after seeing strong sales, landlord Triple Five is said to be looking for more luxury players to join the mix. 

Louis Vuitton opened a 4,600 square foot store in June of 2019 in a prominent location on the mall’s second level. That was followed with Saint Laurent which opened in December of 2020 in a 2,880 square foot space nearby, with Gucci joining them in April of 2021 in a 5,000 square foot space. All three side-by-side retailers are said to be seeing remarkable success despite the pandemic with Gucci recently bringing in some ready-to-wear fashions. 

The landlord is now said to be talking to numerous other luxury brands to potentially open stores nearby, given the proven sales numbers of the three newer retailers as well as brands such as Tiffany & Co. which has operated a store at West Edmonton Mall since October of 2013. 

Exterior of Gucci at West Edmonton Mall. Photo: Gucci

Luxury retail in Edmonton has shifted to West Edmonton Mall from downtown where for years Holt Renfrew was the main source for luxury goods. Holt Renfrew closed its two-level store at downtown Edmonton’s Manulife Place in early 2020. That resulted in the loss of brands such as Burberry and Max Mara which were carried at Holts and are no longer selling in the Edmonton market. 

Those brands and others could open at West Edmonton Mall given strong sales for high-end goods. Prior to the pandemic, the median family income in Edmonton was $97,800, making it one of the highest in Canada for a major city. The cost of living in Edmonton, particularly real estate, is significantly lower than in Toronto and Vancouver which both also have lower household incomes. 

It’s not necessarily the wealth of a city that dictates the number of luxury brands however — Ottawa is an example of that with its high household incomes and large population and lack of luxury brand stores. Spending patterns are key, and a growing brand-focused Asian population in Edmonton means that a market is there for luxury brands. One representative at the mall noted that even students of all backgrounds are saving up money to shop at stores such as Gucci, creating a market for luxury that isn’t just for the wealthy. A return of tourism is also expected to further boost spending from visitors from Alberta and beyond.

Exterior of new Saint Laurent store at WEM. Photo: West Edmonton Mall
Exterior of Saint Laurent store at West Edmonton Mall. Photo: West Edmonton Mall

The shift of luxury to West Edmonton Mall signals the end of such high-end shopping in downtown Edmonton. In years past Edmonton’s downtown core boasted store locations for brands such as Escada, Ports, and Bally. The dominance of the car and a preference for the suburbs resulted in downtown Edmonton being one of only two major cities in Canada to see all downtown department stores shutter (the other being Winnipeg).  

Calgary, a city that has typically been viewed as being wealthier and flashier than Edmonton, has also seen growth in luxury retail. The city’s downtown Holt Renfrew store saw Chanel move to a large street-level space in June of 2020, while the suburban CF Chinook Centre is home to Louis Vuitton, Burberry, Tiffany & Co., Saks Fifth Avenue and rumour has it Gucci will be joining them. 

It’s not yet known what luxury brands might open at West Edmonton Mall. Burberry is a common name in several upscale malls in North America, and other brands such as Balenciaga and Fendi are also said to be looking to open more standalone stores in Canada. We’ll follow up with this article when we learn more about luxury brands opening stores at West Edmonton Mall. 

Interview with La Maison Simons’ New CEO Bernard Leblanc on the Future of the Iconic Retailer

By
Mario Toneguzzi
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Peter Simons names Bernard Leblanc president and chief executive officer (CNW Group/La Maison Simons)

Bernard Leblanc recognizes he has some big shoes to fill as he recently became the first non-family member to lead Canadian retailer La Maison Simons with its roots dating back to 1840 in Quebec.

With Peter Simons stepping down from his leadership role in the company, Leblanc, with a strong history and connection to both the retailer and the industry, became the brand’s new President and CEO, with a mission to continue to build on the enormous success the Simons’ family has generated over the years. 

“I am honoured by the trust placed in me by the Simons family. I begin this mandate with a responsibility and duty to look after the posterity of Canada’s oldest private family business, and to preserve the legacy left by five generations,” said Leblanc.

PHOTO: SIMONS

“We will continue to pursue the brand’s development in store and online, while we continue our reflection on the future of retail. I am privileged to work with all our employees so that Simons remains a special place where we offer an extraordinary experience and exceptional customer service. This change is made with the desire to preserve the unique formula that has built our reputation for over 180 years.

“Imagine the privilege I’ve been given and the vote of confidence. It’s an immense honour for me.”

Leblanc was with the company back in the 1990s with responsibility of the product development team, leading all of Simons’ exclusive brand development in Quebec City. He was also responsible for some of the categories as a merchant as well. He was with Simons initially from 1994 to 2000. 

He then went to BRP for 15 years. Leblanc came back to Simons in 2015. It was timed with the retailer’s national expansion. 

Leblanc said when someone picks up the mandate of CEO for any company, the first few days you feel that weight.

Simons Store | CF Rideau Centre in Ottawa

“In this context, I wouldn’t be honest with you if I didn’t say there’s a little bit of tickle in my stomach. But on the flip side, I have a really nice, great working relationship with Peter (Simons). The fact is that he’s still around, it’s not as if he was announcing his retirement, the fact that we can continue that collaboration, we’re mutual counsellors to each other,” said Leblanc. “We have been that forever. We work in a very synergistic approach. We have very complementary talents.

“I guess that’s my safety net to say the least and the fact he’s not too far away if I need his counsel or his help on certain things.”

La Maison Simons has 15 stores operating in Canada with a new opening in early May at CF Fairview Pointe-Claire in the west island of Montreal. It will be the company’s 10th store in Quebec. Stores are also located in Ottawa, Mississauga, two in Edmonton, Calgary and Vancouver.

“We’re still seeing quite aggressive growth on the e-commerce side. That’s a growth vector for us. We still have some work to do quite honestly in our notoriety outside of Quebec. There’s still some awareness build that we need to work on throughout our markets outside of Quebec. There’s such a rich history in Quebec. It’s extremely difficult to build that same level of awareness once you hit new markets,” said Leblanc.

La Maison Simons 977 Saint-Catherine St W. PHOTO: MAXIME FRECHETTE

“Clearly, a lot of work still needs to be done on those investments that we have made in the markets throughout Canada. We have nothing yet in the Atlantic so that’s on our radar screen. We’ll see if there’s something that might come to light there in the next little while and big cities like Toronto, like Vancouver. If you think we have three stores in Quebec City, five in Montreal, clearly there’s space in both Toronto and Vancouver. 

“Honestly, we don’t have anything in Toronto or Vancouver in the works right now but we’re always staying abreast of what’s going on, seeing the redevelopment projects that are happening. We never really had the ambition to grow just for growth’s sake. It was always kind of a thoughtful growth. So that will continue. We want to take on ambitious goals and be audacious in the choices we make. So we’ll see. We’ll keep monitoring the market and post-pandemic as things pick up I’m rather bullish about physical retail frankly. I think, if anything, people will be seeking to reconnect with that human side.”

Leblanc said Simons has always had customer service at its core and how the retailer defines itself. The key is making sure that customer service remains very centric in all of its choices.

“This leads me to this concept I’ve termed frontierless commerce . . . This absolute seamless customer centric journey where we’re able to accompany the customer through multiple channels at the same time. And whether they’re coming through social media, or whether they’re coming through live streaming, or whether they’re coming through the website, or through physical stores, how do we interconnect all those pieces,” he said.

Simons entrance at Park Royal Shopping Centre in West Vancouver.
Simons entrance at Park Royal Shopping Centre in West Vancouver. Photo: Lee Rivett.

“The ambition of frontierless commerce in my mind is to be able to pick up from where the customer left online and then when they show up in store know exactly what they’ve done to date and the associate will be able to pick up the story line directly from that point forward. Technology is not there yet but we’re trying to find ways where we can interconnect all those pieces and really eliminate still some of the friction points that exist.”

Leblanc said he also thinks all elements touching on sustainability will evolve quite quickly. People are discovering that the retail sector has a bigger impact on the environment than they ever thought and they’re demanding it offers alternatives with a much lesser impact. 

Leblanc grew up in Montreal and lived about seven years of his childhood in Toronto. He moved to Quebec City in the early 1990s. He went to Concordia University in Montreal and graduated with a Bachelor of Commerce degree in International Business with a minor in finance.

“I actually worked in retail part-time through school. So it was already part of something I enjoyed doing. I have a pretty strong service mindset. I really enjoy being with people and being with the customers and being of service,” he said.

“This industry is very close to my heart. I enjoy it.”

Statistics Canada is Changing How it Monitors Food Prices and “It Couldn’t Come at a Worse Time”: Expert

By
Sylvain Charlebois
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The Market by Longo's in First Canadian Place (Image: Dustin Fuhs)

All eyes are on inflation these days, especially on prices at the grocery store. We all need to spend on the necessities, but food is the one thing we need every single day, and the food choices we make matter a great deal to our budget. To know what is going on with food prices, most of us turn to Statistics Canada for details. But now, without fanfare, we just learned that the federal agency is changing its method in May on how it monitors food prices, and the change could not have happened at a worst time.

The year 2022 will likely be a year for the record books. We have barely ended a quarter of the year, and most of us already know that the cost to feed ourselves will increase dramatically. Traditionally, Statistics Canada would tell us how food prices have progressed over the years in order to have a better sense of how food inflation is affecting us. However, starting in May, that is likely not going to be possible.

Statistics Canada’s undetailed announcement is posted in a note to readers at the very bottom of its monthly Consumer Price Index report. The placement of this note means few people will have noted it, and this is why most of us missed it. Usually, these things take months, sometimes years for agencies like Statistics Canada to plan, but still. 

Over the next few weeks, the database containing the average prices of fifty-two products sold in Canadian grocery stores will be completely removed by Statistics Canada. The federal agency is essentially turning the page on more than 25 years of data to establish in return an expanded list of products whose prices will be collected every month. This new list will likely be more reflective of the modern-day diet.

There is no doubt that this change was needed as the list of products was quite dated. In fact, even if you go back 25 years, the list was quite immaterial for most of us. For example, the only fish on the list was canned salmon. Fish and seafood is a huge industry for Canada, and canned salmon was the only fish that Statistics Canada was monitoring over the last 25 years. The produce category also had just a handful of options, for instance, juice only had one option—orange. While the vegetable protein category was not at all represented. Today, vegetable proteins are consumed by a growing number of Canadians. The new food guide is more than three years old now, and most food items mentioned on the current list are consumed at a much lesser extent by Canadians today.

Nonetheless, according to Statistics Canada’s note, once the new list comes out, we will not be able to go back beyond March 2022 to access the prices of food items, This means that attaining any historical perspective on the new food basket will not be possible. By removing this historical perspective essentially leaves us without the ability to make better sense of how food is impacting our lives over the years. Money spent on food will influence lifestyles, and our socio-economic status and historical points of reference have always been helpful to us all, including other government branches, economists, and researchers. Making Statistic Canada’s change quite disappointing.

It appears the federal agency will not even be creating two food baskets in parallel so data can overlap. So odd. In the United States and elsewhere, typically, federal agencies don’t necessarily erase entire databases, or at least not make them inaccessible to the public. 

Statistics Canada has been criticized over the years for its inaccuracy with inflation, especially with food inflation. This new change makes one wonder about motives and why its announcement was so quiet. In the very subtle announcement, the agency also mentioned that they will be adding more data points which is good news. It needs a larger database no matter what.  

In general, this move is not great news for Canadians. With this change, we can only believe that the federal agency is admitting its reading of food inflation over the last few years was in accurate and its approach needed a complete overhaul. Yet Statistics Canada won’t necessarily admit it. Well, to be fair, it can’t really, given how such an announcement would be received in and outside of the country.

Nevertheless, Canadians will want to know how certain food items are more expensive compared with last year, or even two years ago. For this to occur now, the only suggestion is to keep your weekly flyers somewhere as it will be the only way for you to really know what has happened to food prices in Canada.

Canadian Retail News From Around The Web For March 22nd, 2022

By
Retail Insider
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Canadian Retail News From Around The Web

News at a Glance

Retail Insider is streamlining its Canadian retail news from around the web to include a handful of top news stories that can be viewed quickly during the day. Here are the top stories from the past 24 hours.

Pet Valu Seeing Significant Growth in Canadian Market with New Store Openings: Interview

By
Mario Toneguzzi
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Pet Valu on Front Street in Toronto (Image: Dustin Fuhs)

Pet Valu, the leading Canadian specialty retailer of pet food and pet-related supplies, aggressively grew its store presence in Canada during the pandemic with plans for continued significant growth.

Richard Maltsbarger, President and Chief Executive Officer, said the brand, with more than 700 stores, opened 20 new stores in 2020 and 30 new stores in 2021. 

Richard Maltsbarger

He said the pandemic has been tough on a personal level for the past two years on people, including the animal care experts working at Pet Valu stores. Also global supply chain disruptions and pandemic restrictions have been difficult for all retailers.

“But at the same time, we have to accept that the pandemic has also created opportunity in the pet industry. A recent study conducted by Narrative Research in November of 2021, on top of a study they did similarly in November of 2020, indicates that about three million new pets were adopted in Canada in the past two years which would be about five times the normal rate of adoption,” he said.

“That creates a significant lift in overall total market span. If you look at these three million pets that were adopted, over 80 per cent of them are less than two years old. So when you look at an average dog or cat lifecycle being somewhere around eight to 15 years that would indicate that we’ve got at least about a decade ahead of us where this overall increase in the pet population in Canada is going to continue to be an annuity.”

Pet Valu Store (Image: Pet Valu)

Research has indicated pet owners spend about $700 to $800 per year for a cat and a little more than $1,000 for a dog.

“So if you look at the majority of these pets being less than two years old, we’ve got a decade of those annual spends ahead of us. We do realize that the very significant growth in the industry, being more than double digits in the past two years, is above the normal level of about six per cent per year,” said Maltsbarger. “We don’t expect that significant lift will continue.

“But remember, this industry has been growing at about six per cent every year including recessionary years since the mid 90s, really driven by the humanization of pets, the overall improvement and increase in quality of the ingredients going into pet foods and those longer term trends will help to continue to support us just now on a much larger population of pet owners in Canada.”

In the fourth quarter of 2021, system-wide sales for Pet Valu were $288.5 million, an increase of 11.7 per cent. Net income was $26.7 million, up from $13.8 million in the prior year.

Frozen Food at Pet Valu Front Street in Toronto (Image: Dustin Fuhs

For fiscal year 2021, system-wide sales were $998.1 million, an increase of 18.6 per cent. Net income was $98.8 million, up from $28.6 million in the prior year.

For the full year 2022, Pet Valu said it expects same-store sales growth of between six and nine per cent and 30 to 45 new store openings inclusive of five to 10 stores under the Chico banner in Quebec.

Earlier this year, Pet Valu announced its entry into the Québec market with the acquisition of Les Franchises Chico Inc. Chico is Québec’s largest franchisor of pet specialty stores, with 66 locations across the province.  It was founded in 1983 by Pierre Charbonneau and Michel Joly. In 2021, it generated system-wide sales of approximately $79 million and revenue of approximately $7 million. Maltsbarger said the Chico brand has opened 20 new stores in the past two years.

“Together the two chains have opened 70 stores across the past two years which is about as much growth as the rest of all of Canadian pet combined,” said Maltsbarger. “For us, it really is the strength of the demand from new owner/operator based franchisees across Canada. The unique and great part of our model is between Chico and Pet Valu combined we have more than 300 local owner/operators. No single owner has more than six stores and the vast majority, 67 per cent, own a single store, about 23 per cent own two stores. So 90 per cent of our owners only operate one or two stores.

“Everybody is a required owner/operator. It truly is a model that keeps the owner close to the operation in the local community and especially during COVID, and the pandemic, a lot of people have really asked themselves what do I want to do professionally that’s both fiscally but also personally rewarding. We found a lot of devoted pet lovers have come to us in the past two years and said I really do believe that my avocation and my vocation should be the same thing and I’d love to become part of your network.

“As we look ahead to 2022, we target another year of growth ahead of our long-term model. We are also excited to welcome Chico to the Pet Valu family, providing us with an experienced entry into Quebec, and positioning us to better serve Canada’s devoted pet lovers with 700 stores across all 10 provinces.”

The Pet Valu family of stores consists of Pet Valu across all provinces, Paulmacs Pets in Ontario, Bosley’s by Pet Valu in BC, Total Pet with one store in Alberta and the rest in BC and Tisol Pet Nutrition & Supply in BC.

“This is a people-based business. The difference that we bring to the marketplace and what’s fundamentally most important to me is I believe that your customers can’t have a better experience than your people do. So we have really reinvested both on the corporate side and the franchise side into the compassion and expertise of our ACE’s (animal care expert) in the stores. Last year, we updated our expert certification for our ACE’s in the stores and actually increased hourly wages as a reward for those who achieved expert level certification,” said Maltsbarger.

“And we’ve really begun to see that positive flywheel. Whereas the industry has grown on a two-year growth rate of about 20 per cent, we’ve achieved a two-year growth rate in excess of 30 per cent. So we’ve actually grown 50 per cent faster than the industry. And I really credit our franchise owners, our in-store ACE’s and the leaders of our business with really bringing their whole self, their true compassion as a devoted pet lover and someone who enjoys serving other humans.”

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