Total Canadian retail sales looked like they were on a path to recovery in the second half of last year, but things have slowed down somewhat in recent months. Going forward however, it’s unlikely that we’ll see another disastrous downward spike like Q2 2020. But it could be an illusion, because upcoming retail sales numbers in the months ahead will be being compared to very weak year ago results.
Although a third COVID wave is upon us, affected Canadian retailers should now be faster and smarter with counter-measures such as store sanitation, e-commerce, home delivery and curbside pickup.
Overall Canadian retail sales were up 2.1% year-over-year for the 3 months ending February 2021. While the 3 month trend (orange line in the above chart) remains positive, it has weakened recently. The underlying 12 month trend (green line) however is still declining and there’s little relief in sight. Furthermore, sales trends and business fortunes are very uneven among the major retail sectors.
Food & Drug
A major exception to the general case is the Food & Drug sector, which has received an unprecedented boost from the COVID pandemic. The main effect is likely that people are now preparing their own food and eating in more often as restaurants are shut down and social gatherings are restricted.
Retail sales in the sector increased 10.6% year-over-year for the 3 months ending February. The 3 month growth trend has been strong since the pandemic started, and the underlying 12 month trend has been moving up steadily as a result.
Supermarkets and other grocery stores are enjoying particularly high gains, with retail sales up 14.7% for the 3 months ending February. Specialty food stores also are doing well, with sales gaining 14.5% during the same period.
Retail sales at health & personal care stores were up 5.2% for the 3 months ending February. While this is not as robust as for food stores, it’s still more than double the overall retail average.
The Store Merchandise sector has been on a wild roller coaster ride. Retail sales plunged at the outset of the COVID pandemic as non-essential retailers and whole shopping malls closed down. As the first wave of COVID passed and retailers reopened, sales spiked up in the second half of last year as if to make up for lost time. Then pandemic wave 2 came along and led to another round of shutdowns and stay at home orders, and thereby a slowdown in retail sales growth.
For the 3 months ending February, retail sales in the sector gained a modest 2.1% year-over-year. But this could actually (and misleadingly) improve going forward because of comparisons to particularly weak retail sales last year.
There are still stark differences in sales trends among various retailer types in Store Merchandise. Retail sales at clothing & clothing accessories stores were down a whopping 33.0% over the 3 months ending February, but building material & garden equipment/supplies dealers were up 24.9%.
Automotive & Related
The Automotive & Related sector remains a major weak spot in Canadian retail. Sales declined 5.7% for the 3 months ending February 2021, which comes on the heels of a 12.0% decline in 2020.
Gasoline station retail sales are the main problem. Their retail sales were down 16.0% for the last 3 months. Without gas stations, overall Canadian retail sales would have been up 4.2% instead of 2.1%.
New car dealers are also struggling. Their retail sales were down 4.8% year-over-year for the 3 months ending February 2021. On the other hand, the much smaller other motor vehicle dealers group increased sales by 34.4% during the same period.
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
Many Canadian consumers have turned to e-commerce as COVID has severely restricted access to bricks & mortar stores. E-commerce retail sales were up 91.1% year-over-year for the 3 months ending February 2021. The pandemic has accelerated e-commerce in this country by perhaps 5 years. When things get back to “normal”, not all the sales that have gone online will return to physical stores.
Overall, e-commerce represented about 6.6% 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 February 2021, electronic shopping and mail-order houses had an estimated $25.2 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 February 2021, this group had an estimated $16.8 billion in e-commerce sales. With electronic shopping and mail-order houses, there’s a grand total of $41.8 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 95.6% of their sales are currently allocated to e-commerce. For (mostly) bricks & mortar retailers, it can be estimated that 2.7% 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 60.4% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers’ share of e-commerce was 39.6%.
For more explanation on the e-commerce numbers, see Statistics Canada: Retail E-commerce in Canada.