Retail sales in Canada decreased 0.8 per cent to $66.1 billion in May as sales were down in eight of nine subsectors, led by decreases at food and beverage retailers, reported Statistics Canada.
The federal agency said core retail sales—which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers—were down 1.4% in May and in volume terms, retail sales decreased 0.7 per cent in May.
“Following an increase of 1.2 per cent in April, core retail sales were down 1.4 per cent in May on lower receipts at all core retail subsectors, with the largest decrease in sales being at food and beverage retailers (-1.9 per cent). Sales at food and beverage retailers were down on lower sales at supermarkets and other grocery retailers (except convenience retailers) (-2.1 per cent) and beer, wine and liquor retailers (-3.3 per cent),” said the report.
“Lower sales in May were also reported at building material and garden equipment and supplies dealers (-2.7 per cent) and general merchandise retailers (-1.0 per cent).
“On a seasonally adjusted basis, retail e-commerce sales were down 3.6 per cent to $3.9 billion in May, accounting for 5.9 per cent of total retail trade, compared with 6.1% in April.”
An advance estimate of retail sales by StatsCan suggests that sales decreased 0.3 per cent in June.
Maria Solovieva, Economist with TD Economics, said April’s momentum in retail sales proved to be short-lived, with a sharp reversal in May and an expected sluggish performance in June.
“Our internal credit and debit card spending data also indicate softness. Although certain sectors, particularly services, show some resilience, the overall spending trajectory suggests that consumers remain cautious, preferring to build precautionary savings rather than spend,” she said.
“Considering this, real personal spending is tracking around +0.7% (quarter-on-quarter annualized) in Q2. (The) report adds further to the evidence that the BoC (Bank of Canada) will cut rates when it meets next week.”
Last week retail giant Amazon reported its biggest sales this year for Prime Day.
Canadian data from Salesforce showed:
- Discount rates (averaging at 27% off) were much more enticing this year compared to last year’s Prime Day with Canadian retailers increasing discount usage by 11%
- Sales for non-Amazon retailers in Canada grew by 8% YoY
- Canadian retailers witnessed consumers buying more units per transaction YOY (4.7% compared to 4.2 in 2023)
- Canadian web traffic grew by 5% YoY (compared to +2% globally), while order growth shows an increase of 6% (higher than the flat 0% growth globally)
- Add to cart value (19%), conversion rate (2.5%) and cart abandonment rate (87%) for Canada remains stable YOY
- Social traffic grew by 1% YOY (11% compared to 10% in 2023)
“For the first time in a long time we’re seeing order volumes turn positive in certain markets and discounting is high. The lesson from the US and Australia is a simple one — if retailers deliver on discounting and providing true value, they will release that pressure valve of built-up demand and see incredible success. If they don’t, retailers may risk losing out as shoppers will go elsewhere,” said Caila Schwartz, Director of Consumer Insights, Salesforce.
According to the Bank of Canada’s latest Canadian Survey of Consumer Expectations, consumers’ perceptions of inflation are unchanged from a quarter ago, but their expectations for inflation over the next 12 months have declined significantly.
“Both measures have improved substantially in recent quarters, although they remain higher than they were before the COVID‑19 pandemic. Most consumers continue to think that domestic factors—in particular, high government spending and elevated housing costs—are contributing to high inflation,” it said.
“Sentiment remains subdued and unchanged from last quarter, as high inflation and elevated interest rates continue to constrain people’s budgets. Perceived financial stress remains high, most consumers continue to report spending cuts, and pessimism about future economic conditions persists. However, homebuying intentions are close to the historical average, supported by strong plans among newcomers to purchase a home,” added the report.
“Consumers’ perceptions of the labour market have weakened this quarter, especially among private sector employees. However, overall wage growth expectations reached a new survey high, driven by public sector employees who anticipate their salaries will catch up with the higher cost of living.”
