The latest numbers from Statistics Canada for November 2020 show that total retail sales have recently hit the highest growth rates in 3 years. Nevertheless, due to declines earlier in the year, 2020 overall retail sales will likely end up at about 1% down. Furthermore, things don’t look good going into December and January due to reinstated COVID lockdowns and even curfews. The collapse of retail sales in Q2 2020 shows what could happen.
There is a school of thought that all the money consumers are not spending on restaurants, theatres, travel, and other entertainment is getting saved and will eventually work its way back to the retail market, perhaps in late 2021 after the COVID pandemic substantially dissipates. There is no precedent for this however, so it still remains to be seen. Once it’s safe to go shopping again, there will likely be an uptick in retail sales, but no one knows how much that will be nor how long it might last.
Total Canadian retail sales were up 7.0% year-over-year for the 3 months ending November 2020, a 3 year high. Due to the deep declines earlier in the year however, year-to-date retail sales are still down 1.9%, and are unlikely to finish in the black with only one month left to go. This will make 2020 the worst year for retail sales growth since 2009 and the “Great Recession”.
Food & Drug
For the 3 months ending November 2020, Food & Drug retail sales were up a whopping 10.0% year-over-year, which could be an all time high. Year-to-date sales are up 8.2%, and the sector is poised for record breaking growth in 2020.
Supermarkets and other grocery stores are the main driver of sales growth in Food & Drug, with retail sales up 11.0% year-to-date. Convenience stores, specialty food stores, and beer, wine & liquor stores are also having a strong year.
After only modest growth in the first half of the year, retail sales at health & personal care stores are now also showing strong gains. Their sales were up 10.9% for the 3 months ending November.
Recent sales increases in the Store Merchandise sector are even more impressive. Their sales were up 11.6% for the 3 months ending November. Due to significant declines in Q2 however, year-to-date sales are up only a modest 1.0%.
The 3 month sales trend (orange line in the chart) is now at record high levels, and the underlying 12 month trend (green line) is following suit. But it may not last. New COVID lockdowns and shutdowns started to come into effect in December, which will likely result in slower sales and even declines as occurred in Q2. Retailers however should now have a better handle on and more tools to deal with the situation.
Many retailer types have been experiencing strong sales growth in recent months, often by double digits. One glaring exception however is clothing and accessories stores, whose sales were down 12.5% for the 3 months ending November. These retailers are more likely to be small chains and independents with fewer resources and located in shopping malls they depend on for foot traffic. Live by the mall, die by the mall.
Automotive & Related
Retail sales in the Automotive & Related sector have improved from the collapse in Q2 2020, although the 3 month trend is now hovering at around the 0% growth level. The underlying 12 month trend (green line in the chart) has gone flat at about the minus 11% level. In the short term at least, there appears to be little relief on the horizon.
Automobile dealers’ sales however have partially recovered from the disastrous results earlier in the year. Their sales were up 5.4% for the 3 months ending November, although still down 10.9% year-to-date for 2020.
Gasoline stations continue to be the main drag on overall Canadian retail sales. Their sales were down 16.0% for the 3 months ending November. While overall retail sales were up 7.0% over this period, the result would be plus 9.7% if gasoline stations are excluded.
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
The chart above shows that the pace of Canadian e-commerce retail sales doubled year-over-year in Q2 2020 with the onset of the COVID pandemic. That has since cooled off somewhat, but to “only” a 74.5% increase for the 3 months ending November. By any measure, this is still phenomenal growth.
Overall, e-commerce represented about 5.7% of Canadian retail sales for the 12 months ending November 2020, including both pure play 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 November 2020, electronic shopping and mail-order houses had an estimated $21.8 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. For the 12 months ending November, this group had an estimated $13.7 billion in e-commerce sales. With electronic shopping and mail-order houses, there’s a grand total of $35.6 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 93.6% of their sales are allocated to e-commerce. For (mostly) bricks & mortar retailers, it can be estimated that 2.3% 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 61.4% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers’ share of e-commerce was 38.6%.
For more explanation on the e-commerce numbers, see Statistics Canada: Retail E-commerce in Canada.