Canada’s retail sales continue the downfall in 2023 with All Stores in January growing 2.9% YOY and All stores Less Automotive, Food, Pharmacies up only 1.3% YOY.
Minimal growth was prevalent in most categories, but March saw impressive growth in:
- Clothing Stores, up 9.2% YOY,
- Shoe Stores, up 14.2% YOY, and
- General Merchandise Stores, up 7.6%.
General merchandise stores are understandable as people are shopping at Walmart, Costco, etc. for groceries more than supermarkets as inflation continues to climb. Clothing stores and shoe stores growing significantly is more perplexing to the JCWG team as we continue to watch this category more closely. There was no news on increased revenues for Canadian fashion retailers, and the majority of people who are back to work in office have long since made their purchases. Comment below for any of your insights on Clothing and Shoe Stores’ growth in March!
A category that was also up in March that the JCWG team found interesting was Convenience Retailers, up 11.1% YOY. This category has been struggling since restrictions were eased during the pandemic, and inflation has caused people to limit their impulse purchases. JCWG is intrigued by news that there is a push for convenience stores in Ontario to begin carrying alcohol. Though this was originally announced in 2018, it has sat dormant until recently. This will be a story to watch, as we believe that this will significantly help convenience store retailers with increasing their traffic and revenues after a post-pandemic slow down.
Finally, categories that saw large downturns in March all tie back to housing and the slow down of big-ticket purchases:
- Building Material and Garden Equipment, down -14.4% YOY,
- Furniture Stores, down -5.7% YOY, and
- Home Furnishings Stores, down -6.7%.
As noted in our latest US NRB, Home Depot saw their worst revenue miss in 20 years in Q1. The home improvement retailer said that the falling price of lumber and cold weather were the reason for this decline. Another reason, and one that the JCWG team thought was more relevant, was the fact that customers were delaying large projects and buying fewer big ticket items.
If US retail sales are any indication, this is just the beginning of a slippery slope for 2023 Canadian retail sales. Some things we are thinking about as we move through 2023 are:
- Where are customers going to be looking for furniture (a declining category) as new entrants like Fox Home enter the Canadian market?
- Why are clothing and accessories still growing as inflation continues?
- What home improvements will consumers still make?
- How have YOU prepared to keep your clothing or accessory business strong?
For support in your fashion retail strategy and planning, reach out to the trusted experience at JCWG!
The JCWG team is headed to RCC STORE23 May 30 & 31. Be sure to catch Lisa Hutcheson, our Managing Partner, on the main stage in conversation with Michele Guimond, Vice President Marketing at Mountain Equipment Co. chatting about “Building the Future on People, Purpose, and Planet Principles” as well as the breakout session with an esteemed panel discussing ‘The Future of Shopping Centres and Real Estate”. If you and your team are going, connect with us for a coffee chat!