Canadian retail sales grew 2.4% YOY for All Sales in September as they continue on a path of slight growth. However, All Stores Less Automotive, Food, and Pharmacies were down -1.0% YOY as discretionary spend continues to decline even further.
JCWG would be remiss if not to mention how Black Friday was fairing in Toronto as StatCan’s release happened to fall on Black Friday. Observations in downtown Toronto showed lower than expected early traffic, with footfall at the CF Toronto Eaton Centre following suit. Considering 40% of consumers were planning to shop on Black Friday according to a RCC/Leger study, JCWG is a little surprised. However, this is likely as a result of continued work-from-home with many offices, and Friday being a very common day to stay home. Suburban shopping centres were likely to experience higher traffic as people leave on their lunch breaks or after work to try to stock up on gift giving purchases for the upcoming holidays.
As with other months throughout summer 2023, wildfires had a significant impact on sales regionally throughout Canada. Retail sales in the Territories experienced a decline of -6.6% YTD, largely due to the fires in the Northwest Territories. In addition to fires, we continue to see lower sales in the most expensive provinces as inflation continues to grow, with British Columbia and Ontario only up 0.4% and 0.6% YTD respectively.
Last month we discussed the changes in laws in B.C. to crack down on short-term rentals and suspected they would have an effect on Ontario, more specifically Toronto. This week, the Government of Canada announced they will be limiting income tax reductions for short-term rentals on a federal level. As previously reported, we suspect this will continue to hit those who sell furniture. These categories continue to struggle in September, more so than in August for most:
- Furniture Stores, down -7.3% YOY, (August down -6.6%)
- Home Furnishings Stores, down -12.5% YOY, (August down -8.4%) and
- Building Material and Garden Equipment, down -6.76% YOY, (August down -7.2%).
Retailers in these categories will need to innovate going forward to maintain market share, and this decrease in sales may take some time to recover.
Holiday 2023 has had conflicting reports. Whereas the RCC and Leger have predicted an increase of 14% over last year, Deloitte is predicting an 11% decrease. While both studies have different respondents, JCWG is predicting trends to be more central, though further towards a negative spend. The economic outlook in Canada is not great, and consumers are struggling. However, maybe consumers will surprise us and splurge throughout the end of the year.
Thank you J.C. Williams Group for this report.
