Slow and steady remains the trend for Canada’s 2023 retail sales to date, with All Stores in January growing 4.9% YOY and All stores Less Automotive, Food, Pharmacies up only 2.4% YOY.
An early trend in 2023 is the Food and Beverage Stores industry, up 3.5% YOY (below the rate of food inflation, which rose 10.6% in February, 2023). As a result of these seemingly endless increases in the cost of food in Canada, Specialty Food Stores are bearing a significant brunt, continuing a downward trend in February of -9.1% YOY. Currenty, non-specialty food costs the same as specialty foods did a year ago. Specialty foods seem to be the first cutbacks that Canadians are taking to combat their rising grocery bills.
Even though February 2022 and February 2023 were very similar through a COVID lockdown and health lens, there were still significant shifts in consumer sentiment. A key example of this is people’s work lives. Last week, the JCWG team visited RCC Human Resources Conference in Toronto and returning to office work is still on everyone’s minds. This is being reflected in Clothing Stores, up 14.3% YOY, and Shoe Stores up an even more impressive 24.4% YOY.
An interesting correlation that is further showing itself in 2023 is the decline of Beer, Wine, and Liquor Stores, down -1.7% YOY. This has been a topic of discussion at JCWG recently, and our early insights consider:
- Though some media outlets focus on Canadians saying they will not change their alcohol habits, a combination of the new guidelines in Canada suggesting that more than 2 drinks a week could have negative effects on our health, a more health-conscious consumer post-COVID, and a rising cost of living may be enough for people to limit their alcohol consumption.
- Sober living is on the rise. For example, the JCWG x Ebeltoft Retail Innovations 18 book, features a retailer that has moved to selling the ingredients for non-alcoholic cocktails.
- The increasing acceptance in Canada of Cannabis being an alcohol alternative. With more municipalities (most recently Mississauga Ontario) allowing for dispensaries to open and Cannabis being seen as a healthier alternative to alcohol (especially edibles, oils, etc.), we suspect Cannabis Retailers, up 12.8% YOY, to continue a path of growth.
February’s modest growth in retail sales continues as the trend of inflation, housing, work life, and societal changes being major factors in specific categories’ growth or decline. However, certain players can still succeed in their industries with the right strategy. As we continue to move through 2023, the alcohol and cannabis categories are on our minds, as we consider:
- Where will be the next municipality to approve dispensaries after success in other markets?
- When will Cannabis Retailers oversaturate current demand and start to shutter?
- What can make alcohol more appealing within the new guidelines?
- Why are alcohol retailers not innovating more in their store strategy to combat changing consumer preferences?
- How are YOU changing your alcohol/cannabis consumption habits in 2023 with new information, guidelines, and accessibility?
For support in your retail strategy, planning, and innovation, reach out to the trusted experience at JCWG!
