There is a V-shaped recovery underway in retail sales, according to the latest data from Statistics Canada. How things are playing out varies among the main retail sectors however, and retail life is still not back to the pre-pandemic business as usual.
Total Canadian retail sales were down 3.4% year-over-year for the 3 months ending July 2020, but this is a significant improvement compared to recent results. The above chart shows that the 3 month average retail sales growth rate (orange line) is now heading up the second leg of the V, and is likely to cross into positive territory in another month or two. The underlying 12 month trend (green line) has now turned upward as well, but so much damage has been done that it may not get back to zero growth for the year 2020 overall.
Food & Drug
Retail sales growth in the Food & Drug sector actually got a boost from COVID, as these stores remained open for the most part. This trend appears to be continuing for now, but it’s difficult to see it going on indefinitely.
Sector retail sales were up 8.8% year-over-year for the 3 months ending July. The 3 month trend (orange line in the chart) continues to be strong, and the underlying 12 month trend (green line) may be on its way to record levels. Some of this might actually be a permanent gain at the expense of the restaurant industry.
At supermarkets & other grocery stores retail sales were up a strong 12.2% year-over-year for the 3 months ending July. Convenience stores and specialty food stores, which had a slow start to 2020, have rebounded with year-over-year sales increases of 13.8% and 11.2% respectively in the latest 3 month period.
Health and personal care stores also may be coming around. After a few rough months, their retail sales now appear to be heading in the right direction with a gain of 1.1% year-over-year for the 3 months ending July.
Store Merchandise
The Store Merchandise sector demonstrates a classic V shaped collapse and recovery and is now on the upstroke side. What is unpredictable however how it can come back. There’s likely to be some permanent loss to e-commerce as more consumers have discovered online shopping recently. The sector’s retail sales were down just 0.6% year-over-year for the 3 months ending July, a much better result than in recent months. In July alone, retail sales were up 7.3%, and this appears to be a good indication of where things are headed.
General merchandise stores weren't as badly affected by COVID, particularly as compared to mall-based specialty retailers. Also, this group includes combination stores that are partly in the food business as well some large retailers that may be more developed in e-commerce. The general merchandise group's retail sales were up a healthy 11.5% year-over-year for the 3 months ending July.
Clothing and clothing accessories stores however have had a rough time, and there have been a number of bankruptcies and store closures among their ranks. While many other retail types have gotten on the road to recovery, retail sales were still down a huge 36.1% year-over-year for the 3 months ending July.
There were mixed results for other retailers in this sector. Sales at furniture and home furnishings stores were down 10.9% in the period, but building material and garden equipment & supplies dealers gained 6.4%.
Automotive & Related
The Automotive & Related sector shows a particularly deep V shape. Retail sales seem to be on a path to recovery now, but there's still a long way to go. Sector sales were down an ugly 14.5% year-over-year for the 3 months ending July, although that's actually an improvement over recent performance.
Retail sales growth at new car dealers remains negative, down 15.6% for the period, but that's "less bad" than some of the results earlier in the year. Gasoline station sales were even worse, declining 24.5% in the last 3 months versus a year ago.
Automotive & Related is the main drag on total Canadian retail sales. If excluded, total sales would be down 1.0% year-over-year for the 3 months ending July instead of down 3.4%.
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
The pace of Canadian retail e-commerce sales roughly doubled in Q2 2020 thanks to consumers switching to online shopping. For the 3 months ending July, sales were up 86.9% year-over-year. This is actually slightly off earlier results but still at a nosebleed level by any measure.
Overall, e-commerce represented about 4.9% of Canadian retail sales for the 12 months ending July 2020, including both pure play as well as brick & clicks stores. In July alone, e-commerce's share of total retail was 4.8%. 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 July 2020, electronic shopping and mail-order houses had an estimated $18.4 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 July 2020, this group had an estimated $11.5 billion in e-commerce sales. With electronic shopping and mail-order houses, there's a grand total of $29.9 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 90.3% of their sales are allocated to e-commerce. For (mostly) bricks & mortar retailers, it can be estimated that 1.9% 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.
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.
