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The Rocky Road Back to Normal for Canadian Retailers: StatsCan Analysis from Ed Strapagiel

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The latest numbers from StatsCan indicate some crazy swings in Canadian retail sales. For the 3 months ending April 2021, total retail sales increased by a record breaking 28.3% year-over-year (orange line in the chart below). But there is good reason for it. In the same period last year, 2020, sales were significantly depressed as COVID began to really impact retail activity. But compared to the same months in 2019, Canadian retail sales gained 5.3% per annum over the two years, a much more normal result.

There will likely be more ups and downs in Canadian retail sales in the months ahead. COVID was and is a big shock and it will take some time for retail markets to settle down. Another factor is that the major retail sectors are all showing different instabilities, both positive and negative.

Food & Drug

The Food & Drug sector enjoyed record high retail sales increases in 2020, at the height of the COVID pandemic. Now however things are rapidly coming back down to earth. Retail sales were up only 1.6% year-over-year for the 3 months ending April 2021 (orange line in the above chart). The underlying 12 month growth trend (green line) is now past its peak and poised to decline further.

Supermarkets & other grocery stores make up just over half of the sector, but their retail sales were down 3.5% over the 3 months ending April, the first such decline in 5 years. High sales gains at supermarkets & other grocery stores were instrumental in keeping Canadian retail from being a total disaster in 2020, but the bloom is off that rose now.

On the other hand, retail sales at health & personal care stores gained 9.5% for the 3 months ending April. This allowed the Food & Drug sector to eke out a modest positive gain overall.

Store Merchandise

The Store Merchandise sector has taken off like a rocket. Retail sales gained a nosebleed 35.0% year-over-year for the 3 months ending April, an all time record. In part at least, this is because year ago sales were significantly down due to COVID and “non-essential” retail closures. Another factor is probably that both retailers and consumers are getting better at online shopping, curbside pickup, and home delivery.

Although COVID was still with us in April, many Store Merchandise retailers still managed huge gains. Sales levels at most store types were back up to about pre-pandemic levels or better. The major exception to this is clothing and clothing accessories stores. Despite an increase of 50.6% over 2020 for the 3 months ending April, their sales were still down 23.2% compared to the same period in 2019.

Automotive & Related has come roaring back after a most dismal year in 2020. Over the 3 months ending April 2021, sector retail sales were up 53.7% year-over-year. This large gain is mostly a result of comparing this year to very depressed sales from a year ago.

New car dealers’ retail sales gains were particularly robust, up 67.9% year-over-year for the 3 months ending April. Retail sales at used car and other motor vehicle dealers were also up by large amounts.

Thanks to gas price increases, gasoline stations also had a significant gain in retail sales, up 20.8% in the period. This was their largest such gain in 4 years.

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 above chart implies that e-commerce retail sales in Canada are cooling off, but this is a misleading impression. Total e-commerce sales were up 44.9% year-over-year for the 3 months ending April, but unlike other retail sectors, it’s not because last year’s results were poor. In 2020, sales gained 71.3% during the period, so the 2021 result is on top of that.

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 April 2021, electronic shopping and mail-order houses had an estimated $26.6 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 April 2021, this group had an estimated $17.2 billion in e-commerce sales. With electronic shopping and mail-order houses, there’s a grand total of $43.7 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 96.0% 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 60.8% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers’ share of e-commerce was 39.2%.

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

Monthly Update Notification

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.

Read More Canadian Retail Analyses From Retail Insider:

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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