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Canadian Retail 2020 Winners and Losers: Ed Strapagiel Analysis

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The latest retail sales numbers from Statistics Canada were for December 2020, thus rounding out the year. But it wasn’t a good year, as Canadian retail sales declined 1.3% in 2020. A summary of Canadian retail sales growth over the last few years is as follows:

Retail sales growth in 2020 was the lowest since 2009, when a decline of 2.9% was recorded during the “Great Recession”. Different retail sectors had uneven results. Food & Drug led the way with a record high 8.8% retail sales growth in 2020, while Store Merchandise eked out a 1.0% gain, and the Automotive & Related sector had an exceptionally poor year with sales down 11.3%. The relative fortunes of Canadian retailers have been rearranged, as some retailer types had big sales gains while others had huge declines.

Total Canadian retail sales were up 5.7% year-over-year in Q4 2020. Due to the steep declines in Q2 however, the underlying 12 month trend (green line in the chart) is still in negative territory. It’s unlikely that this will improve much in the short term, due to renewed lockdowns and other anti-COVID measures put in place going into 2021. Hopefully, retailers are now better versed in sales tactics such as online marketing, home delivery and curbside pickup.

Food & Drug

Retail sales at Food & Drug stores were up a record-breaking 11.5% year-over-year in Q4 2020. The 3 month sales growth trend (orange line in the chart) is hovering at historically high levels, and the underlying 12 month trend (green line) has taken off like a rocket. This is seldom seen in the Food & Drug sector where trends tend to be relatively modest and steady.

Supermarkets & other grocery stores are enjoying significant retail sales increases, up 12.3% year-over-year in Q4 2020 and up 11.7% for the year. Convenience stores and specialty food stores also recorded double digit retail sales increases in Q4.

Health & personal care stores had a slow start to the year but are now bouncing back with a vengeance. Although their gain for 2020 overall was only 4.2%, their retail sales were up 12.4% in Q4 alone.

Store Merchandise

Store Merchandise went for a roller coaster ride in 2020. Retail sales were down 12.4% year-over-year in Q2, but that has since recovered to a gain of 7.6% in Q4. The sector ended 2020 with a modest 1.0% gain for the year overall.

Both the 3 month retail sales trend and the underlying 12 month trend improved significantly in the second half of 2020. These positive developments may not continue into 2021 however, due to renewed lockdowns, shutdowns and other anti-COVID shopping restrictions.

A number of retailer types had a particularly strong Q4, including building material & garden equipment/supplies dealers (up 24.3%), miscellaneous store retailers, which includes cannabis retailers (up 17.6%), electronics & appliance stores (up 15.8%), and furniture & home furnishings stores (up 14.8%).

On the other hand, clothing and accessories stores remain a disaster area. Their retail sales were down 18.5% year-over-year in Q4, and down a whopping 26.8% for 2020 overall.

The Automotive & Related sector’s retail sales were devastated in Q2 2020 but have since backed away from the brink. Nevertheless, conditions remain grim. Retail sales declined 1.4% year-over-year in Q4 and sector sales were down 11.3% for 2020 overall.

Automobile dealers did manage a 2.7% increase in Q4 2020, but were still down 11.0% for the year in total. A small but bright spot is with other motor vehicle dealers, where Q4 retail sales rose 33.5% year-over-year and a 10.7% increase was recorded for the 2020. This category covers motor homes, recreational trailers, campers, motorcycles, recreational watercraft, snowmobiles, off-road all-terrain vehicles, utility trailers and aircraft.

Gasoline station retail sales were down again in Q4 2020, by 17.7% year-over-year. For the full year, sales declined 17.8%. There doesn’t seem to be any good news for gas stations on the horizon.

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 doubled year-over-year in Q2 2020 with the onset of the COVID pandemic. That has now settled down somewhat to a slightly less spectacular 72.0% year-over-year increase in Q4 2020.

Overall, e-commerce represented about 5.9% of Canadian retail sales in 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. In 2020, electronic shopping and mail-order houses had an estimated $22.8 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 year 2020, this group had an estimated $14.7 billion in e-commerce sales. With electronic shopping and mail-order houses, there’s a grand total of $37.5 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 94.6% of their 2020 sales are allocated to e-commerce. For (mostly) bricks & mortar retailers, it can be estimated that 2.4% 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 60.9% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers’ share of e-commerce was 39.1%.

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

Article Author

Ed Strapagielhttp://strapagiel.com/
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.

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