Canadian consumer spending maintained positive momentum in February with an encouraging outlook expected for retailers across the country in the coming months.
The Mastercard Spending Pulse report indicated February retail sales, excluding auto, rose by 6.2 per cent year-over-year and they were up 22.7 per cent compared to pre-pandemic spending in 2019.
Also, in-store sales grew 15.2 per cent in February compared to the same month last year and 12.2 per cent versus pre-pandemic as consumers resume in-person activity. E-commerce sales were down (19.8 per cent) when compared to elevated growth in February 2021, however online sales are up 101.4 per cent when compared to February 2019.
“Despite inflation, consumers are putting their record savings to work and expressing themselves through fashion again—much to the benefit of the Apparel, Jewelry and Leather Goods verticals, according to Mastercard SpendingPulse,” said Steve Sadove, senior advisor for Mastercard and former CEO and Chairman of Saks Incorporated.
“You have a lot of people who are out there who have historically over the last couple of years said retail’s dead. Or the consumer’s not shopping. What’s very clear, and I see it in the Canadian data and I see it in the United States data, is that the consumer is alive and healthy. They’re shopping. They’re shopping very differently than they used to shop and there are an enormous amount of shifts going on in the behaviour.
“But overall the consumer wants to get out. What you had in the earlier states of the pandemic was this nesting going on. Everybody, for all kinds of good reasons, they wanted to be safe, they wanted to stay home, if they went out and shopped they wanted to shop somewhere that was big box because they felt safer in a big box . . . And they didn’t go out to a restaurant. They stayed home.”
Sadove said that pattern continued for about a year and a half. But during the last six months, as the pandemic has evolved to become closer to an endemic, people have started to get used to living with the virus and the Omicron variant has started to wane. People have become more comfortable with getting out and returning to their more normal behaviour.
He said February retail sales showed a six per cent year-over-year hike, January was up four per cent, December rose by 10 per cent, November four per cent, and October six per cent.
Sadove said the 15.2 per cent year-over-year growth in in-store sales is the healthiest numbers seen in years and years.
“People want to get back to a physical store. They want to touch stuff. They want to experience product,” he said, adding that while e-commerce numbers are down those numbers have still doubled compared to pre-pandemic.
“Still you’ve seen a vast increase in the digitization and growth of e-commerce.”
Other key findings from the report include:
- Return to office attire: Apparel (18.3 per cent) growth rates remained elevated for the month as consumers prepare to return to physical offices, updating their wardrobes after nearly two years of working remotely. Jewelry and Leather Goods (24.4 per cent) also experienced growth with Valentine’s Day falling mid-month;
- Home décor continues: Furniture and Furnishings sales were positive again in February as Canadians continue to spend on their homes, with Home Furniture and Furnishings up 6.7 per cent and Home Improvement up 9.0 per cent;
- Restaurant resurgence: Restaurant sales (21.0 per cent year-over-year) continued to grow in February as Canadians slowly felt more comfortable with in-person dining; and
- Back to gadgets: Electronic sales were back up 19.3 per cent year-over-year and more significantly 52.3 per cent year-over-three-years in February, after a year-over-year decrease in January (24.9 per cent).
“The way I would describe apparel was when the pandemic hit nobody was going to work. They were staying home and they were living in their sweat suits. And they were dressed super casually and they didn’t have anywhere to go. They couldn’t go to an office, they couldn’t go to a social event and they were just staying home. So you saw this big decline in apparel,” said Sadove.
“And now all of a sudden as the world has started to open, and everything is tied together, you see the big growth in restaurants, people are going out. They want to wear something in a restaurant. They’re tired of wearing their sweat pants and by the way they might have changed their weight a little bit. Some of them lost weight, some of them gained weight. So they want to get new clothes.
“And as you come into more of the reopening, there’s a whole new fashion cycle going on. So people who have been stuck in their houses or their apartments now what they want to do is they want to flaunt it a little bit. They want to get out, they want to get out and express themselves. And so you have a lot more vibrant colours, you have a little sexier, you have a little bit of new styles in clothing. So everybody’s out buying that newness and you’re seeing it in the numbers in terms of the resurrection of the growth in apparel.”
Sadove said restaurants and apparel were the two hardest hit categories during the earlier stages of the pandemic. People want to get back out to restaurants now.
“Anything that is what I would call the experience and experiences are restaurants, they’re local travel, they’re not international travel but they’re getting around, they want to get out and visit places. So you’re seeing a growth in things that are tied to experiences. That’s one theme,” said Sadove.
“Another theme is a self-expression. I see it in the jewelry numbers. Again, people have been at home. They want to treat themselves. They want to look good, they want to get a new handbag, they want to wear some new jewelry. That’s showing a big growth in those categories.
“One of the surprising numbers to me is that in the beginning of the pandemic everyone stayed home and all they did was fix up their houses and home improvement, that’s still continuing. It’s not been an either or. I would have thought that you would have seen a slow down a little bit in the home improvement and part of it is because the supply chains have been so difficult. They’ve been waiting for the refrigerator to come for a year or something like that. People are continuing to invest in their homes and you’re seeing that in the data as well.”
