Statistics Canada has just released numbers for last December and we can now look at the year 2021 overall. A summary of annual Canadian retail sales growth over the last few years is as follows.
Retail sales growth in 2021 was 11.6%, the highest in the last 5 years. While this looks good, there are a number of caveats. First of all, the high sales gain in 2021 reflects a rebound from the previous year, when total retail sales actually declined thanks to COVID. The annual gain was also significantly boosted by the Automotive & Related sector, especially gasoline stations whose 2021 sales increased 24.4% due to gas prices. Furthermore, most of last year’s gain occurred in the first half of the year; by the time the 4th quarter rolled around, retail sales were up a more modest 6.4% year-over-year.
The chart above shows the slowing momentum of Canadian retail sales. The 3 month growth trend (orange line) peaked in Q2 2021 and has significantly declined since. The underlying 12 month trend (green line) has now gone flat and is poised to decline going into 2022.
Food & Drug
After setting records in 2020, the Food & Drug sector had very modest growth in 2021, with sales up just 1.9%. The trend lines declined over most of the year. In Q4, retail sales recorded a rare dip into negative territory, down 0.6% year-over-year. The underlying 12 month trend has also taken a nosedive, despite inflation and population growth. None of this bodes well going into 2022.
Grocery stores account for just over half of retail sales in the sector, but their sales were down 1.1% year-over-year in Q4 2021. Convenience stores also saw a large Q4 decline, with retail sales down 8.9% year-over-year. Among all food & beverage retailers, only beer, wine & liquor stores recorded a sales gain in Q4 of 4.8%.
Health & personal care stores had a fairly strong start to 2021, but this evaporated over the course of the year. Their retail sales were down 1.8% in Q4.
Retail sales for the Store Merchandise sector were up 12.8% in 2021, a record high. But again, this was a rebound from slow sales from the year before due to COVID. Also, most of this sales increase happened in Q2 and things have slowed somewhat since. In Q4, year-over-year retail sales were up 8.1%, which is still a healthy increase, but just not as good as earlier in the year.
Clothing & clothing accessories stores did have an exceptionally good 2021. Their retail sales were up 21.2% for the year and 24.5% in Q4 alone. General merchandise stores also did well, with sales up 8.7% for the year and up 10.7% in Q4.
Electronics & appliance stores tended to lag the rest of the Store Merchandise sector in 2021. Nevertheless, they did manage a 4.5% retail sales increase for the year, although this deteriorated to a 6.5% decline in Q4.
Automotive & Related
Retail sales in the Automotive & Related sector were up a whopping 19.5% in 2021. This was due to strong gains in vehicle sales earlier in the year combined with big gains in gasoline station sales throughout most of 2021. By Q4 however, sales gains at new car dealers slowed down to 3.4% year-over-year. This was more than offset by a nosebleed 34.8% increase in gasoline station retail sales in Q4.
Gas stations’ huge sales gains are due to high increases in pump prices, and this tends to distort the overall retail picture. While overall Canadian retail sales were up 6.4% in Q4, this would be only 4.0% if gas stations are excluded. When you pay more for gas, your vehicle doesn’t go any further and the ride isn’t any better – but you do have less money to spend on other things. Furthermore, increasing gas prices are inflationary, both directly and because everything one buys has to trucked to a warehouse, distribution centre, store, or home.
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
Annual Canadian e-commerce retail sales increased by 74.2% in 2020 as COVID hit, and then by a further 14.2% in 2021. E-commerce is still growing, but not as fast as it used to. In Q4 2021, e-commerce sales actually declined by 4.2%, and growth may be flat going forward as COVID restrictions continue to be lifted.
Overall, e-commerce represented about 6.2% of retail sales over the past 12 months, according to Statistics Canada, 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. In 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 2021, this group had an estimated $17.1 billion in e-commerce sales. With electronic shopping and mail-order houses, there’s a grand total of $43.8 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 96.0% of their sales are currently allocated to e-commerce. For (mostly) bricks & mortar retailers, it can be estimated that 2.5% 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 60.9% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers’ share of e-commerce was 39.1%.
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.
22 February 2022