Total Canadian retail sales growth has cooled off somewhat, after hitting some high rates late last year. Nevertheless, there was still a respectable increase of 2.8% for the three months ending January 2021. In the month of January alone however, total retail sales actually declined by 1.1%, although this is on a preliminary and unadjusted basis.
The underlying 12 month trend (green line in the above chart) continues to struggle and remains in negative territory, mostly due to the extreme decline in retail sales growth in Q2 2020. We are however likely to see some positive growth trends this spring – even if only because retail sales in the coming months of 2021 will be compared to very weak 2020 year ago numbers.
Another matter is that sales trends are very uneven among the major retail sectors. Food & Drug is doing extremely well, a recovery in Store Merchandise is now losing steam, Automotive & Related appears to be on its way down again, and E-Commerce is absolutely booming.
Food & Drug
The Food & Drug sector is hitting record highs in retail sales, with growth of 11.4% year-over-year for the three months ending January 2021. The underlying 12 month trend has been on a steep upward trajectory for almost a year.
Retail sales at supermarkets and other grocery stores have been particularly strong, increasing 13.4% for the three months ending January 2021. Even so, the smaller specialty food stores group reported an even bigger gain of 14.7% in the same period.
Health & personal care stores are also contributing to the success of the Food & Drug sector. Their retail sales grew by 10.1% year-over-year for the three months ending January.
Retail sales growth in the Store Merchandise sector collapsed in the first half of 2020, but returned to positive territory in the second half of the year. And now, going into 2021, it appears to be softening again. For the three months ending January 2021, retail sales increased a modest 3.7%, but in January alone sales declined 2.1% (a preliminary and unadjusted figure).
Within Store Merchandise, retail fortunes vary greatly by store type. Sales at building material and garden equipment/supplies dealers were up a whopping 23.9% year-over-year for the three months ending January 2021, miscellaneous store retailers (which include cannabis stores) gained 15.4%, and electronics and appliance stores were up 12.3%. At the other end of the scale, retail sales at clothing and accessories stores were down a disastrous 26.9%.
Some of this may be related to retailer size and store format. Larger operations generally have deeper pockets and higher leverage for developing e-commerce capabilities, plus stand-alone locations suitable for curbside pick-up operations. Small fashion retailers however may not be as sophisticated in e-commerce and delivery services, and also to be stuck in locked down shopping malls.
Automotive & Related
Automotive & Related got run over in the first half of 2020, fought its way back to flat by the end of the year, but now seems to have hit another pothole. Retail sales declined 5.9% year-over-year for the three months ending January 2021, and by 11.3% in January alone.
Gasoline station retail sales were particularly weak, down 18.4% for the last three months. While pump prices have stabilized, people are still driving less due to anti-COVID measures.
New car dealers showed some life a few months ago but now are back to a downward trajectory. Their retail sales declined 4.3% year-over-year for the three months ending January 2021.
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
With store shutdowns and shopping mall closures, Canadian consumers turned to e-commerce in a big way in 2020. This is continuing going into 2021. E-commerce retail sales were up 83.6% year-over-year for the three months ending January 2021.
Overall, e-commerce represented about 6.3% of Canadian retail sales over the past 12 months, including both pure plays 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. Over the 12 months ending January 2021, electronic shopping and mail-order houses had an estimated $23.8 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 January 2021, this group had an estimated $15.7 billion in e-commerce sales. With electronic shopping and mail-order houses, there’s a grand total of $39.5 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 95.1% of their sales are currently allocated to e-commerce. For (mostly) bricks & mortar retailers, it can be estimated that 2.6% 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 60.3% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers’ share of e-commerce was 39.7%.
For more explanation on the e-commerce numbers, see Statistics Canada: Retail E-commerce in Canada.
Read More Canadian Retail Analyses From Retail Insider:
- Canadian Retail 2020 Winners and Losers: Ed Strapagiel Analysis
- Canadian Retail – Sales Up, Prospects Down: Ed Strapagiel