Canadian retail sales are up, though only slightly, in April 2023 with All Stores in January growing 1.1% YOY and All stores Less Automotive, Food, Pharmacies up only 0.4% YOY.
Clothing Stores (up 13.37% YOY) and Shoe Stores (up 21.8% YOY) are continuing their sales trajectory in 2023 with both categories experiencing double digit growth so far in 2023, up 14.4% YTD and 24% YTD respectively. The sales in these categories are finally, consistently exceeding pre-pandemic levels rather than just peaks followed by declines. The growth in April could be attributed to:
- The exit of Nordstrom and Nordstrom Rack stores. Though the anticipated clearance sales were not deep discounts in April, their impending departures were undoubtedly driving consumers to shopping centres in an attempt to get some luxury products on sale. When the lacklustre Nordstrom clearance sales were realized, the rest of the shopping centre’s clothing and accessory tenants were able to benefit and pick up the slack.
- Inflation remains top of mind for consumers, but this may not be reflective of clothing and accessories. Regardless of whether the price of clothing has gone up, consumers typically notice these changes in higher frequency, habitual purchases like groceries and gas. Consumers may not notice that the clothing they purchased in April 2022 and the clothing they purchased in April 2023 are different prices, as styles change, and they shop different brands.
Another category experiencing impressive growth is Health and Personal Care Stores, up 8.2% YOY in April. There has been some volatility in this industry throughout the waves of the pandemic, but overall, there has been a steady increase. This was a topic of conversation at Retail Innovations Conference and Expo in Chicago last week, with presenter Ari Peralta, (CEO, Arigami), focusing on the fact that the industry was expected to reach $4.6 trillion in the US in the near future. This not only includes products, but health experiences including an increase in spas, yoga and wellness retreats as well as medical tourism, etc. This expansion will also be seen in Canada, especially since the recent announcement by the Ontario Government that they would be converting Ontario Place into a destination spa. Categories that will also see the effects of this trend include:
- Beer, Wine and Liquor Stores (up 0.8% YOY): As people become more health conscious, this category will continue to suffer as people move towards more non-alcoholic beverages.
- Cannabis Retailers (up 10.3% YOY): Though often seen as a healthier alternative to alcohol (when not inhaled), CBD-based products, creams, etc. will continue to gain popularity as people focus on wellness.
Two categories that have taken divergent paths compared to 2021/2022 are surrounding grocery, with Specialty Food Stores down -2.5% YOY and Convenience Stores up 10.7% YOY. In 2021/2022, at the beginning on inflationary periods, people were changing their shopping habits towards experience and Specialty Food Stores sales were accelerating. People were still in the groove of cooking at home and meal planning and were enjoying the finer foods offered by these retailers. Conversely, as people were also buying in bulk, Convenience Stores were down as people were still not leaving their house everyday and therefore making fewer impulse purchases. These categories have since flipped, with Specialty Food taking a hit as a result of higher food costs, and Convenience Stores increasing for the same reason, since higher food costs (for those in low/medium income) mean they do not have the money to buy in bulk and are instead living paycheque to paycheque.
Though the growth in Canadian retail sales were low in most categories in April, there were still some impressive standouts as consumer preferences continue to evolve. Going into May, we are thinking about:
- When will health and wellness tourism start to pick up in Canada? Will new spa offerings be sufficient?
- Where are convenience retailers finding to be the most successful locations with office traffic still down?
- What category of products are specialty food stores finding are still driving traffic?
- How have YOU prepared for the increase in health and wellness spend?
2023 has been a busy year for retail conferences, and it has been great to meet and learn from so many of you. As we are now able to catch our breath, we are looking at staying a little closer to home with options like Retail West, the Retail Sustainability Conference, etc. Are there any upcoming conferences or expos that you are finding valuable, and we should consider? Let us know and we can meet you there!