By Ed Strapagiel
After staging a respectable recovery in the early months of 2019, Canadian retail sales growth has now lost some steam, according to the latest unadjusted numbers from Statistics Canada. For the 3 months ending May 2019, total retail sales were up a modest 2.5% year-over-year. More importantly, the recent pattern of upward movement now seems to have been broken. This might be just a temporary setback … or not.
Both the 3 month trend (orange line in the chart above) and the underlying 12 month trend (green line) had been on the mend earlier in the year, but now they look like they have hit a speedbump and have fallen off the pace.
After 5 months of 2019, total retail sales are up just 2.3% versus a year ago. There’s still a way to go to even match the disappointing 2.9% annual gain recorded for 2018.
Food & Drug
Retail sales growth in Food & Drug is actually leading the other major retail sectors. Sales gained 3.2% year-over-year for the 3 months ending May 2019. This however was the lowest such gain in 8 months, reinforcing the theme of hitting a speedbump. Both the 3 month and 12 month trends appear to have flattened out.
On the other hand, after 5 months of the year, year-to-date Food & Drug retail sales are up 3.8%. This is fairly good news compared to last year’s miserly annual increase of 2.7%.
Supermarkets & other grocery stores are the main driver in Food & Drug. Their retail sales were up 3.7% year-over-year for the 3 months ending May 2019, and up 4.5% year-to-date so far in 2019. Health and personal care stores also did well, with a retail sales gain of 3.2% for the last 3 months, considerably ahead of the 2.0% posted for all of 2018.
Convenience stores however are the laggard of the sector. Their retail sales were actually down 0.9% for the 3 months ending May 2019.
The Store Merchandise sector is another case of a modest recovery earlier in the year which could now be cooling off. For the 3 months ending May 2019, retail sales were up just 1.9%, even less than the disappointing 2.8% annual increase last year.
The 3 month trend (orange line in the chart) and the underlying 12 month trend (green line) were starting to show signs of life earlier in the year, but both have now dipped. It’s difficult to say where these trends will go next.
A few store types had had particularly poor results which drove down sales gains in the sector for the 3 months ending May 2019. Retail sales at electronics & appliance stores were down 7.8% year-over-year, shoe stores declined 3.7%, sporting goods, hobby, book & music stores were off 2.7%, and building material and garden equipment & supplies lost 0.3%.
Only miscellaneous store retailers reported a healthy gain for the 3 months ending May, up 8.2% year-over-year, mostly thanks to the addition of new cannabis stores. Furniture and home furnishings stores however did provide some positive news, with a 5.1% retail sales increase for the 3 months, after having gained just 0.8% through all of 2018.
Note that Statistics Canada is now suppressing the breakdown of general merchandise stores for confidentiality reasons. The figures in the “By The Numbers” table below are estimates based on previous trends.
Automotive & Related
Retail sales growth in the Automotive & Related sector fell like a rock in 2018, made a modest comeback in early 2019, and now appear to be stalling. Total retail sales were up 2.5% year-over-year for the 3 months ending May 2019, which is rather modest by historical standards.
Retail sales at new car dealers gained 3.0% for the 3 months ending May 2019, an “okay” result but nothing to get excited about. Used car dealers continue to enjoy high sales gains however, up 13.7% year-over-year for the 3 month period. Automotive parts, accessories & tire stores gained 6.3%, over double the overall retail average.
Gasoline stations are still the laggards in the sector, but may be strengthening somewhat. Their retail sales were down 1.1% year-over-year for the 3 months ending May 2019, but this is actually an improvement over the 6.4% decline gas stations posted for Q1 2019.
By The Numbers
Special Note: Statistics Canada revised historical data with the February 2019 release. Unadjusted monthly data were revised back to January 2018, while seasonally adjusted data were revised back to January 2015. Those keeping score should update their files. The analysis in this report is always based on unadjusted data.
For definitions of store types, see Statistics Canada NAICS.
Canadian E-Commerce Sales
StatsCan started providing ecommerce retail sales data in January 2016. While the amount of data is limited, some trends appear to be emerging. Here are some results.
Overall, e-commerce represented about 3.1% of total Canadian retail sales for the 3 months ending May 2019, including both pure play operators as well as the online operations of brick & mortar stores. Canadian consumers however also buy online from foreign websites which is not captured in these numbers.
Canadian e-commerce sales were up 18.7% year-over-year for the 3 months ending May 2019. This was significantly higher than for location based retail which gained 2.5%.
Note that location based retail is the same as that in the preceding large “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 May 2019, electronic shopping and mail-order houses had an estimated $11.7 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. For the 12 months ending May 2019, this group had an estimated $7.6 billion in e-commerce sales. With electronic shopping and mail-order houses, there’s a grand total of $19.3 billion in e-commerce sales by Canadian operators over the year. 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 retailers.
For electronic shopping and mail-order houses, an estimated 85.4% of their sales are allocated to e-commerce. For (mostly) bricks & mortar retailers, it can be estimated that just 1.2% 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 60.5% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers’ share of e-commerce is 39.5%.
For more explanation on the e-commerce numbers, see Statistics Canada: Retail E-commerce in Canada.
This analysis is updated monthly as new numbers are published by Statistics Canada. If you would like notification of when an update becomes available (and you’ve read this far), please connect with Ed Strapagiel on LinkedIn.