One of the major effects of the pandemic during 2020 was the increase in e-commerce sales, which was a direct result of store/mall closures and other shopping restrictions, said a new report by Trendex North America, a marketing research and consulting firm.
In Canada, the net effect was that during 2020 Canadian total e-commerce sales increased 70.5 per cent and accounted for 6.1 per cent of retail sales.
E-commerce growth in Canada slowed in 2021 as stores/malls continued to reopen after March 2021 and consumers resumed their normal shopping behaviour. The net result was that Canadian total e-commerce growth last year slowed to only 14.2 per cent, according to the report.
Randy Harris, president and owner of Trendex North America, said last year was a bit of a wakeup call for all those pundits who had been forecasting a bright future for apparel e-commerce in Canada.
“I want to say that e-commerce in groceries that’s a bright prospect. There’s no doubt that that will continue to grow,” he said.
Harris said a growth, especially in 2020, was attributable to the closing of stores and malls and other restrictions that were pandemic-related to shopping.
“But what we’re seeing this year is that the consumer is returning to the malls, is returning to brick and mortar stores,” he explained.
“In the end, consumers are cutting back on their e-commerce purchasing. This in a sense is bad news for some retailers who bet their farm on e-commerce sales growth. What we’ve got here is a situation where we have e-commerce retailers, or people engaging in that, providing now free shipping in most cases with a minimum order. They’re getting a high rate of return and also the cost of building and maintaining an infrastructure to support their e-commerce operation. What that means if you put it all together e-commerce will only end up being profitable for a certain segment of the apparel industry.
“I think retailers are going to come to grips with this in a while because I think in some cases now they’re actually losing money on their e-commerce operation. And I know nobody else is saying those things but you look at the data from Statistics Canada that’s coming out on e-commerce actually going down so far this year in total. It’s down by about 21 per cent, total e-commerce sales in Canada, through the first four months of the year.
“People have got to look at these numbers and even retailers like Aritizia, which I think is a standout e-commerce company, only reported growth of 15.5 per cent in its first quarter of the year in their e-commerce sales. And the numbers for Canada Goose were not that much better. Again, all of the signs are pointing to a slowdown in e-commerce sales and certainly the growth projections that came out two years ago by industry pundits make absolutely no sense in retrospect at the moment.”
The Trendex report said the pandemic also had an effect on the way in which Canadians purchased apparel. After increasing 13.5 per cent in 2019, apparel e-commerce sales increased 108.1 per cent in 2020.
“However, during 2021 when consumers were not forced to make the choice of buying no apparel or buying online, retail apparel sales became dominated by consumers choosing brick-and-mortar over e-commerce. Determining the magnitude of the resulting decrease in apparel e-commerce sales is a challenge for two reasons: Very few Canadian apparel retailers publish their e-commerce sales and those that do are not reflective of the performance of all Canadian apparel retailers,” said the report.
“However, two of those that do report Canada Goose and lululemon noted that the growth in their e-commerce sales during 2021 fell from 54 per cent to 8.2 per cent and 100.8 per cent to 21.6 per cent respectively. Not surprisingly, Aritzia was the exception as its e-commerce sales increased 87.6 per cent in 2020 and 88.0 per cent in 2021.”
The report said Ingram Micro Commerce and Services estimated that Canadian apparel e-commerce sales fell 7.3 per cent in 2021, while Statistica reported an 8.1 per cent decrease in apparel e-commerce sales.
“Trendex has an even more depressing estimate, as it reported that apparel e-commerce sales fell 10.7 per cent in 2021. The decrease was primarily attributable to a 26 per cent decrease in apparel specialty store e-commerce sales,” said the report.
“When it comes to forecasting the growth for Canadian apparel e-commerce sales, Trendex is taking a contrarian position as we maintain that a segment of consumers going forward will become increasingly disillusioned with purchasing apparel online and will return to both malls that are being reconfigured as lifestyle centres and to stores which are being upgraded with new retail technologies. Bottom line, apparel e-commerce sales from 2021-2026 will increase only marginally more than total apparel sales growth.”