New numbers from StatsCan indicate that the Q2 2021 rebound is over. Actually, it only looked as good as it did because Q2 last year was so bad. The 3 month growth trend (orange line in the chart below) is coming down from recent highs. Overall retail sales still increased 10.8% year-over-year for the 3 months ending July, but half of that was due to the Automotive & Related sector which is now getting softer after its own rebound. After a significant rise earlier in the year, the underlying 12 month trend (green line) has now flattened out and is poised to deteriorate going forward.
More or less, Canadian retail sales are heading back to pre-pandemic levels but with some ups and downs along the way. As shoppers return to stores, e-commerce retail sales growth has also slowed down to a more normal level. Things are still in flux however, and it may be many months before they settle down.
Food & Drug
For the 3 months ending July 2021, retail sales in the Food & Drug increased just 0.5% year-over-year, a far cry from the 7.7% gain recorded for the year 2020. In fact, the 3 month growth trend has been softening since the start of the year 2021, and the underlying 12 month trend is also weakening significantly.
Supermarkets & other grocery stores make up over half of the business in this sector, but their retail sales were actually down 1.6% for the 3 months ending July. Convenience stores however suffered more, with sales down 5.1% during the period. Another casualty was specialty food stores – after scoring high growth rates in recent quarters, their retail sales declined 1.2% for the 3 months ending July.
Health & personal care stores did not share in the strong gains that the Food & Drug sector enjoyed last year. On the other hand, they do not appear to be affected by the current softness and instead saw their sales increase 5.9% in the latest 3 month period.
The Store Merchandise sector appears to be following the standard script. Huge year-over-year retail sales gains in Q2 2021 were mostly illusory, because of very weak sales a year ago. The 3 month trend is now cooling off, although there was still a good 10.6% increase for the 3 months ending July. The underlying 12 month trend however has now flattened out, and is likely to soften further in the next few months.
All store types in the sector had positive year-over-year retail sales gains for the 3 months ending July. Clothing & clothing accessories stores were up an outstanding 27.2%, furniture & home furnishings retailers gained 22.9%, and miscellaneous store retailers (which include cannabis outlets) were up 21.3%. General merchandise stores were also up but by only 3.8%.
Automotive & Related
Retail sales in the Automotive & Related sector were up 20.6% year-over-year for the 3 months ending July, although this represents some cooling off versus earlier in the year. Again, comparisons are affected by weak year ago sales.
New car dealers’ retail sales were up 20.6% in the last 3 months, which however is a more modest gain than in previous quarters. Things may cool off even more going forward due to supply side issues.
Gasoline stations also did their part with a strong 30.7% year-over-year retail sales increase for the 3 months ending July. People seem to be getting out more and pump prices have gone up.
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.
The COVID pandemic touched off a boom in Canadian e-commerce, with retail sales almost doubling in 2020. In recent months however, this has cooled off considerably. For the 3 months ending July, e-commerce sales were up just 5.3%, the lowest such gain since StatsCan started collecting these data in 2016. Does this mean that the bloom is off the e-commerce rose? Probably not. After doubling over the last two years, a bit of a breather is not out of order. Even though more stores are now open for in-person shopping, some of the sales that have gone online are never coming back.
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 July 2021, electronic shopping and mail-order houses had an estimated $26.7 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 July 2021, this group had an estimated $17.6 billion in e-commerce sales. With electronic shopping and mail-order houses, there’s a grand total of $44.3 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 60.2% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers’ share of e-commerce was 39.8%.
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.