StatsCan’s latest data indicates a big recovery in Canadian retail sales. Total retail sales spiked and increased by a nose-bleed 34.9% year-over-year (orange line in the chart below) over the 3 months ending May 2021. The underlying 12 month trend (green line) has also turned sharply upward and is likely headed for a record breaking increase in 2021.
But a large part of this is illusory arising from the mathematics. Suppose sales in some category were $80 billion but then fell to $40 billion, a 50% decline. A year later sales came back up to the old level of $80 billion, an increase of $40 billion but on top of the new base of $40 billion. This is a 100% increase, which seems much higher. But it’s still the same $40 billion moving in and out. You can only take money to the bank, not percentages.
The dramatic current increases in Canadian retail sales are not so much a reflection of how good things are now, but of how bad things were a year ago. This has been further accelerated by a massive rebound in the Automotive & Related sector.
Food & Drug
Counter to the general trend, the Food & Drug sector did extremely well last year during the height of the COVID pandemic, but things are now returning to more normal conditions. For the 3 months ending May 2021, retail sales were up just 0.8% versus the same period a year ago. The underlying 12 month trend has also softened from the highs achieved in 2020.
After supporting overall retail sales in 2020, supermarkets & other grocery stores have now become a liability. Their retail sales were down 5.5% for the 3 months ending May, possibly an all time record decline. Specialty food stores however continue to do well with retail sales up 11.3% during the period.
Health & personal care stores are also showing some strength. Their retail sales were up 12.7% year-over-year for the 3 months ending May. This offset the decline at supermarkets & other grocery stores, resulting in a small sales gain for the sector overall.
Retail sales in the Store Merchandise sector were up an amazing 36.1% year-over-year for the 3 months ending May 2021. Much of this is because year ago sales had significantly declined due to COVID and the closure of non-essential retail stores and shopping malls. The market has also adjusted since then, with both buyers and sellers embracing online shopping, curbside pickup, and home delivery.
Some retailer types scored huge year-over-year gains in the 3 months ending May. Clothing & accessories stores were up 122.2%, furniture & home furnishings retailers gained 83.8%, and sporting goods, hobby, book and music stores saw a 69.3% increase in retail sales. These retailers were some of the hardest hit last year as the pandemic settled in.
Automotive & Related
Retail sales in the Automotive & Related sector have taken off like a rocket, gaining 78.6% year-over-year for the 3 months ending May 2021. This huge increase however is almost all a result of the deep declines in retail sales in the year ago period. The sector is now only getting back to the sales level it was at in pre-pandemic 2019.
New car dealers led the way with retail sales up 100.2% year-over-year for the 3 months ending May. Retail sales at used car and other motor vehicle dealers were also up 89.7%.
Gasoline station retail sales are on the rebound too, with a 44.8% increase in the period. Pump prices have gone up and there are more reasons to drive as COVID restrictions are lifted.
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
As bricks & mortar retail improves, it appears that e-commerce sales’ growth is cooling off from the surge levels of last year. Nevertheless, total e-commerce sales were still up 19.6% year-over-year for the 3 months ending May 2021. This is about the pre-pandemic growth rate, so things seem to be getting back to normal.
Overall, e-commerce represented about 6.5% 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 May 2021, electronic shopping and mail-order houses had an estimated $26.5 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 May 2021, this group had an estimated $17.4 billion in e-commerce sales. With electronic shopping and mail-order houses, there’s a grand total of $43.9 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 60.5% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers’ share of e-commerce was 39.5%.
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.