The latest numbers from Statistics Canada indicate that retail sales growth has cooled off just a little more. Total Canadian retail sales were up 5.8% year-over-year in Q3 2021, which is more in line with historical performance. Even so, this result is buoyed up by gasoline prices – excluding gas stations, Q3 retail sales were up just 3.9%.
The 3 month trend (orange line in the chart below) is weakening and may slip further. The underlying 12 month trend (green line) appears to have peaked and is likely to soften a little more by the end of the year.
All the major retail sectors, even e-commerce, are more or less following this “on the way back to normal” pattern.
Food & Drug
The Food & Drug sector had record high retail sales growth last year as the COVID pandemic raged. Since then however, performance has quickly come down. In Q3 2021, the sector’s retail sales increased only 0.9% year-over-year. The underlying 12 month growth rate has been steadily declining since the start of 2021, and is likely to weaken further by year’s end.
Food is the main problem area. Retail sales at supermarkets & other grocery stores fell 0.8% in Q3 2021 year-over-year, despite annual price inflation running in the 4% to 5% range. Specialty food stores did slightly better, with a 2.8% Q3 gain. It may be that consumers are dining out at restaurants more – it’s the revenge of the hungry Canadian.
Health & personal care stores did manage a reasonable gain in Q3, with retail sales up 4.9%. This is what pulled up the Food & Drug sector to its small but positive Q3 gain.
Store Merchandise
Retail sales in the Store Merchandise sector took a big hit in 2020 due to COVID related store and shopping mall closures. This was followed by a significant growth spike in Q2 2021, which more or less reversed previous losses. This rebound is now in the process of abating. Store Merchandise retail sales were up 7.5% year-over-year in Q3 2021, which is a lower gain than earlier in the year but still well within historical levels. Things seem to be adjusting to more normal conditions.
Most store types in the sector had good Q3 retail sales growth, especially clothing & clothing accessories stores with a gain of 16.1%, and furniture & home furnishings stores at up 10.8%.
Electronics & appliance stores however suffered a loss. Their Q3 retail sales were down 2.1% year-over-year.
Automotive & Related
The Automotive & Related sector is following the same script as Store Merchandise but with much greater extremes. Note that the scale in the above chart is double that of the previous one. The 3 month growth trend (orange line) has plummeted from nearly 80% earlier in the year to 8.1% in Q3 2021.
Slow vehicle sales are one reason behind the current downtrend. New car dealers’ retail sales were up just 2.9% year-over-year in Q3 2021, even though year ago sales were very modest. Due to supply chain issues, the situation is unlikely to improve by the year’s end.
On the other hand, gasoline station retail sales were up 26.0% in Q3, which more than offset lackluster vehicle sales. This however is mostly due to big increases in pump prices. When drivers pay more for gas, the car doesn’t go any farther and the ride isn’t any better – you just have less money for everything else.
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
Canadian e-commerce retail sales benefitted greatly from COVID, but now things have reversed. In Q3 2021, total e-commerce sales were actually down 1.6% year-over-year, the first time a 3 month decline has occurred since Statistics Canada began reporting the numbers.
Overall, e-commerce represented about 6.4% 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 September 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 September 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 $44.2 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 96.1% 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.
