By Ed Strapagiel
According to the latest numbers from Statistics Canada, Canadian retail sales were up 9.1% year-over-year for the 3 months ending February 2022. By historical standards, this is certainly a healthy gain. On the other hand, this is an overall average across all retail sectors, and does not well reflect what’s going on in any particular retail area. The differences are somewhat extreme, ranging from a decline of 16.3% for E-Commerce to a gain of 23.8% in Automotive & Related for the period.
Another matter is that the retail sales total is significantly influenced by the price of gas. Gasoline station sales were up 30.5% year-over-year for the 3 months ending February. Excluding gas stations, overall retail sales would be up 7.2% instead of 9.1%. This is a direct example of how inflation boosts retail sales but just makes consumers poorer.
Food & Drug
For the 3 months ending February 2022, retail sales in the Food & Drug sector declined 1.3% year-over-year, perhaps in part because year ago sales were particularly strong. The underlying 12 month growth trend (green line in the chart) however has been steadily declining over the last year. Food & Drug is normally a fairly steady business and growth declines are unusual, especially in times of high inflation.
Supermarkets & other grocery stores account for a little over half the retail sales in this sector, but their sales were off 3.1% for the 3 months ending February 2022. Convenience stores however fared even worse, with sales down 6.2% during the period.
Health & personal care stores (mostly drug stores and pharmacies) made solid gains and tended to buoy up sector sales last year. For the 3 months ending February 2022 however, their sales were up a scant 0.7%.
While Food & Drug is down in the dumps, the Store Merchandise sector appears to be up on cloud 9. Their retail sales grew by 12.7% year-over-year for the 3 months ending February 2022. The underlying 12 month trend gained 14.1%, a record high. Year ago sales growth however was depressed due to COVID, which likely contributed to making current results look good. By the same token, Q2 2022 gains may not be as robust because of strong sales in the same period in 2021.
Clothing & clothing accessories is the runaway best seller in retail, with sales up a sizzling 39.8% year-over-year for the 3 months ending February 2022. General merchandise, furniture & home furnishings stores, and the other stores group also clocked in with double digit gains for the period.
Electronics & appliance stores however remained the poor cousin of the sector, with a sales decline of 0.7%.
Automotive & Related
The Automotive & Related sector continued to have strong gains, with an increase of 16.4% year-over-year for the 3 months ending February 2022. The underling 12 month trend also improved to a gain of 23.8%.
The main driver here is gasoline station sales, which were up 30.5% year-over year over the last 3 months. This of course is almost entirely a result of pump price increases. When you pay more for gas however, you don’t get more for your money, but you do have less money for everything else.
Sales at automobile dealers were up by 11.1% during the period, somewhat due to slow performance a year ago. But sales growth took off in Q2 last year, so it’s difficult to expect a repeat performance coming up this year.
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 retail sales nearly doubled in 2020 due to COVID. Things cooled off in 2021 but there still was a decent gain. Now, at start of 2022, a correction appears to be underway, with sales declining 16.3% year-over-year for the 3 months ending February 2022. It seems like consumers are going back to the store. The circumstances however are so unprecedented that it’s impossible to know what might happen next.
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. For the 12 months ending February 2022, electronic shopping and mail-order houses had an estimated $27.2 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. This group had an estimated $17.6 billion in e-commerce sales during the period. With electronic shopping and mail-order houses, there’s a grand total of $44.8 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 2.6% 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 60.7% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers’ share of e-commerce was 39.3%.
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.