Retail Insider would like to thank consultant and analyst Ed Strapagiel for his years of providing his monthly StatCan analysis on Canadian retail sales. This is his final post, we wish him the best in his retirement.
Canadian Retail Sales Start to Weaken
Canadian retail sales were up 7.5% year-over-year in Q1 2022, according to the latest data from Statistics Canada. This would normally be a “good” result, except that it isn’t. About 1/3 of it is caused by record high gasoline prices. If gasoline stations are excluded, then the Q1 retail sales gain would be a more modest 5.1%, which is about flat when inflation and population growth are figured in
A number of retail store types are also showing some sales weakness. Even e-commerce sales are declining for the first time ever.
Food & Drug
Retail sales in Food & Drug were down 0.9% year-over-year in Q1 2022, an historical low point. After shooting up in 2020, the underlying 12 month growth trend (green line in the chart) dropped like a stone in 2021, and is at record lows at the start of 2022. This is despite high price inflation in this retail sector.
Grocery stores are by far the largest component of Food & Drug, but their sales were off 2.7% in Q1. Convenience stores suffered the largest decline however, with retail sales down 7.3% for the period. Only the small specialty food stores group had a respectable Q1 gain, at up 5.3%.
Health & personal care stores did better than food, but not by much. Their retail sales were up just 1.2% in Q1 2022.
Retail sales in the Store Merchandise sector were up 10.5% year-over-year in Q1 2022, a good result by historical standards. In the next few months however, this may wane due to very high sales gains in the same period a year ago.
Clothing & clothing accessories stores continue to be the leaders in this sector with retail sales up 33.0% in Q1. Other solid sales gains included miscellaneous store retailers (up 13.6%), furniture & home furnishings stores (up 13.0%), and general merchandise stores (up 9.5%).
No store type in the group had a Q1 sales decline. Even electronics & appliance stores managed to eke out a small gain of 0.6%.
Automotive & Related
Retail sales in Automotive & Related were up 12.3% year-over-year in Q1 2022. This result however misses the schizophrenic nature of the sector, due to different fortunes of auto sales versus gasoline stations.
Automobile dealers recorded a 5.6% retail sales increase in Q1, a fairly good result. The trend lines however are starting to head south, and Q2 sales increases are unlikely to keep up due to supply issues and the high gains set in the same quarter last year.
On the other hand, retail sales at gasoline station were up 31.0% in Q1 2022, which accounts for the high gain in the overall Automotive & Related sector. This in turn is due to high increases in gasoline prices for which no relief appears imminent, particularly with summer driving season about to start.
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 boomed in 2000 as COVID hit but then cooled off in 2021. In Q1 2022, e-commerce retail sales actually declined by 22.8% year-over-year. Note however that e-commerce sales are still well above pre-pandemic levels.
Overall, e-commerce represented about 6.1% of total retail sales over the 12 months ending March 2022, 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 March 2022, electronic shopping and mail-order houses had an estimated $26.8 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 $17.0 billion in e-commerce sales during the period. 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 61.2% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers’ share of e-commerce was 38.8%.
For more explanation on the e-commerce numbers, see Statistics Canada: Retail E-commerce in Canada.