Canadian retail activity weakened in July following a strong finish to the second quarter, but the decline masks a widening divide between categories where purchasing volumes are growing and those where consumers remain under pressure.
Retail sales fell 0.7% from June to $73.7 billion in July, with declines across eight of nine major retail subsectors. Sales volumes decreased 1.1%, reversing much of June’s increase. Retail sales were still 5.1% higher than a year earlier, with strong real demand continuing across several major categories.
Health and personal care, apparel and general merchandise are generating meaningful volume growth, while food retail and several home-related categories remain weak. Gasoline continues to inflate headline retail dollars without corresponding growth in demand.
Retailer reporting adds another dimension. Value considerations are increasingly influencing pricing, promotions, store formats and expansion decisions, particularly in grocery and other categories exposed to household budget pressures.
This September 2026 edition of the Canadian Retail Monitor uses the latest data available for each series. Retail Trade and Wholesale Trade figures cover July, the Retail Commodity Survey covers June, and Consumer Price Index figures cover August. Earlier 2026 results are used where they materially change the interpretation of the latest data.
This Month’s Canadian Retail Analysis
Canadian Retail Dashboard
| Indicator | Latest Result | Change |
|---|---|---|
| Total retail sales — July | $73.7 billion | -0.7% MoM |
| Retail sales, year over year | — | +5.1% |
| Retail sales volume | — | -1.1% MoM |
| Core retail sales* | $46.7 billion | -0.7% MoM |
| Core retail, year over year | — | +3.9% |
| E-commerce sales | $5.49 billion | -3.5% MoM |
| E-commerce share of retail | 7.5% | June: 7.7% |
| All-items CPI — August | — | +3.0% YoY |
| August advance retail estimate | — | +1.3% MoM |
*Core retail excludes gasoline stations and fuel vendors and motor vehicle and parts dealers.
July interrupted the stronger performance recorded in June, when retail sales increased 0.6% and volumes rose 1.5%. Statistics Canada’s preliminary estimate points to a 1.3% increase in retail sales in August, although the figure will be revised when complete survey results become available.
Real Retail Demand Pulls Back After Strong June
July’s weakness was broad. Eight of Canada’s nine major retail subsectors recorded lower sales from June, while core retail sales fell 0.7% after increasing 1.2% the previous month.
The 1.1% decline in sales volumes was larger than the decrease in current-dollar sales, indicating a genuine reduction in purchasing activity during the month.
June had been unusually strong, with volumes rising 1.5%, while retail sales had generally expanded through the first half of 2026. July represents a meaningful reversal, but the available history does not establish a sustained contraction in Canadian retail demand.
The preliminary 1.3% increase estimated for August provides another reason for caution in interpreting July. The estimate is based on responses from 57.8% of companies surveyed, compared with an average final response rate of 87.1% over the previous 12 months.
What Drove Canada’s Retail Growth?
Despite July’s monthly decline, Canadian retail sales were approximately $3.6 billion higher than in July 2025. A relatively small number of categories accounted for most of the increase.
| Retail category | Approx. contribution to YoY retail growth |
|---|---|
| Gasoline and fuel | +1.76 percentage points |
| Health and personal care | +1.03 pts |
| General merchandise | +1.00 pt |
| Motor vehicles and parts | +0.80 pts |
| Sporting, hobby and miscellaneous | +0.34 pts |
| Clothing-related retail | +0.33 pts |
| Food and beverage | +0.08 pts |
| Building materials and garden | -0.02 pts |
| Furniture, home furnishings and electronics | -0.25 pts |
Gasoline again accounted for a disproportionate share of headline retail growth. Sales at gasoline stations and fuel vendors were 20.2% higher than a year earlier, while volumes declined 9.3%.
Health and personal care and general merchandise tell a different story. Both made large contributions to retail growth while also generating strong increases in purchasing volumes, making them considerably stronger indicators of underlying demand.
Price vs. Volume: Where Demand Is Really Growing
Comparing current-dollar sales with constant-price volumes provides a clearer view of the underlying retail market.
| Retail category | Nominal YoY | Real volume YoY | Retail Insider reading |
|---|---|---|---|
| Jewellery, luggage and leather goods | +15.9% | +34.1% | Exceptional real growth |
| Health and personal care | +12.2% | +10.7% | Strong |
| Clothing-related retail | +6.0% | +8.3% | Strengthening |
| General merchandise | +6.8% | +7.1% | Strong |
| Sporting, hobby and miscellaneous | +5.9% | +3.9% | Positive |
| Motor vehicles and parts | +2.9% | +3.1% | Positive |
| Food and beverage | +0.4% | -2.5% | Volume pressure |
| Building materials and garden | -0.4% | -3.4% | Weak, sequentially improving |
| Furniture, home furnishings and electronics | -4.9% | -2.9% | Weak |
| Gasoline and fuel | +20.2% | -9.3% | Price-driven |
The divide is significant. Several discretionary categories are generating meaningful real growth even as consumers remain cautious elsewhere.
Gasoline provides the clearest example of price-driven growth, while apparel-related volumes increased faster than sales dollars. Food retail shows another pattern: modest growth in dollars alongside declining purchasing volumes.
Retail Sector Pulse
Retail Insider maps Statistics Canada data to its own sector classifications to provide a consistent framework for the Canadian Retail Monitor and its sector reports. These are analytical categories rather than official Statistics Canada definitions, with broader industries used as proxies where necessary.
| Retail Insider Sector | September Signal | Key Evidence |
|---|---|---|
| Health & Beauty | Strong | Sales +12.2%; volume +10.7% |
| Apparel & Fashion | Strengthening | Sales +6.0%; volume +8.3% |
| Department Stores & General Merchandise | Strong | Sales +6.8%; volume +7.1% |
| Grocery | Volume Pressure | Food/beverage volume -2.5% |
| Home Furnishings | Weak / Stabilizing | Aggregate volume -2.9%; mixed subsectors |
| Electronics & Appliances | Weak | Persistent annual decline |
| Jewellery & Watches | Strong | Jewellery/luggage/leather volume +34.1% |
| Sporting Goods & Outdoor | Positive | Sporting/hobby/misc. volume +3.9% |
| Automotive | Positive | Motor vehicle/parts volume +3.1% |
| Convenience Retail | Price-driven | Fuel spending +20.2%; volume -9.3% |
| Value / Discount* | Strengthening | Retailer strategies increasingly emphasize value |
*Value and Discount is based partly on company reporting rather than an official Statistics Canada retail classification.
Health & Beauty Sustains Strong Growth
Health and personal care continues to rank among Canada’s strongest retail categories. Sales increased 12.2% from a year earlier in July, while volumes rose 10.7%.
The performance extends a pattern visible throughout 2026. Product-level data provide additional support: Statistics Canada’s June Retail Commodity Survey showed home health product sales increasing 15.9% year over year, while infant care, personal and beauty products increased 9.1%.
Loblaw’s latest reporting provides further Canadian context. Its Drug Retail business generated 6.1% sales growth, with pharmacy and healthcare services same-store sales increasing 7.5%. The company also reported strength in beauty and over-the-counter products.
Together, the retail-industry, commodity and company data support Health & Beauty as one of the more durable growth areas in Canadian retail entering the second half of 2026.
Apparel & Fashion Strengthens
Apparel-related retail continued to improve in July, extending the momentum identified in the previous Canadian Retail Monitor.
Sales at clothing, clothing accessories, shoes, jewellery, luggage and leather goods retailers increased 6.0% from July 2025, while volumes rose 8.3%. In June, sales had increased 5.4% and volumes 6.6%, providing further evidence that the category’s improvement is carrying into the second half of the year.
Clothing volumes increased 5.3% in July and footwear rose 13.5%. Jewellery, luggage and leather goods volumes increased 34.1%, although the breadth of that category means the result should not be interpreted as a measure of luxury demand alone.
The June Retail Commodity Survey points in the same direction, with clothing sales up 8.0%, footwear up 3.3%, and jewellery, watches and luggage increasing 14.8%.
SportChek also reported an 8.0% increase in comparable sales in Canadian Tire’s latest quarter, with athletic footwear among the stronger categories. FIFA World Cup-related demand accounted for roughly half of SportChek’s comparable-sales increase, making that result somewhat stronger than the underlying run rate.
The July data strengthen Retail Insider’s previous assessment of Apparel & Fashion as Improving. Purchasing volumes are now expanding faster than retail dollars, providing stronger evidence of real demand growth.
General Merchandise Holds Strong Annual Gains
General merchandise sales fell 1.9% in July after increasing 2.5% in June, making the category the largest contributor to the monthly decline in total retail sales.
Annual performance remains strong. Sales were 6.8% higher than in July 2025, while volumes increased 7.1%, indicating that the growth is primarily associated with greater purchasing activity.
The category has been volatile during 2026, including a 3.0% increase in January and renewed gains late in the second quarter. July interrupted that acceleration without materially changing the stronger annual demand picture.
Grocery Inflation Eases as Volumes Stay Weak
Grocery retail continues to show a pronounced divide between spending and purchasing volumes. Food and beverage retailer sales increased just 0.4% from July 2025, while volumes declined 2.5%. At supermarkets and other grocery retailers excluding convenience stores, sales increased 1.2% while volumes fell 2.4%.
Inflation is moving in a more favourable direction. Grocery inflation slowed from 4.3% in May to 3.9% in June, 3.1% in July and 2.8% in August. August marked the first time since July 2024 that grocery inflation was below the all-items CPI rate of 3.0%.
The cumulative price increase remains substantial. Food purchased from stores was 29.0% more expensive in August than five years earlier, leaving households operating from a considerably higher price base even as the current rate of inflation moderates.
Retailer strategies continue to reflect those pressures. Loblaw reported food retail sales growth of 3.3% in its latest quarter and same-store growth of 1.6%, while comparable growth at its hard-discount banners was close to 4%. Promotions, private label and discount formats continue to feature prominently in the company’s strategy.
METRO is also increasing its discount exposure. The company plans to convert 10 Metro stores in Ontario to Food Basics and has added 31 discount locations over the previous three years. Management described promotional activity as elevated amid intense competition.
The evidence does not establish universal trade-down among Canadian consumers. It does show that value considerations are influencing store formats, banner investment and promotional strategy across major grocery operators.
For the grocery sector, the inflation problem is easing faster than the volume problem.
Home Retail Shows a Divided Picture
Home-related retail remains challenged, but the latest data argue against treating the entire category as a single market.
Sales at furniture, home furnishings, electronics and appliance retailers declined 4.9% from July 2025, while volumes fell 2.9%. Electronics and appliance volumes were down 3.7%, while furniture volumes were comparatively stable at 0.5% below a year earlier.
Building materials are showing better sequential momentum. Sales at building material and garden equipment and supplies dealers increased 0.8% in July, marking the fourth consecutive monthly increase. Sales were still 0.4% below July 2025 and volumes were down 3.4%, pointing to stabilization from a weak base.
Upstream data offer another indication of activity in the category. Wholesale sales of building materials and supplies increased 3.5% in July and were 14.3% higher than a year earlier, although Statistics Canada noted that higher prices, particularly for steel products, contributed to the increase.
Leon’s latest results add further context. The retailer reported lower revenue even as delivered units increased, with customers around the middle of the market shifting toward lower average price points. Appliance units increased despite lower dollar sales, while premium customers remained comparatively resilient.
Some of the weakness in retail dollars therefore reflects trade-down and lower average selling prices, while electronics and several housing-sensitive categories remain genuinely weak. Building materials, meanwhile, are showing early sequential improvement from a low base.
Canadian Retail Momentum
The Sector Pulse describes current conditions. Retail Insider’s momentum assessment considers whether the latest observations extend or alter patterns visible earlier in 2026.
| Sector | Current Condition | Momentum | Evidence |
|---|---|---|---|
| Health & Beauty | Strong | Sustained | Continued double-digit real growth |
| Apparel & Fashion | Positive | Strengthening | July extends Q2 improvement |
| General Merchandise | Strong | Volatile / Positive | June acceleration partly reversed |
| Grocery | Weak volume | Pressure persists | Real demand remains negative |
| Home Furnishings | Weak | Mixed | Furniture comparatively stable; electronics weak |
| Building Materials | Weak | Improving sequentially | Four consecutive monthly gains |
| Automotive | Positive | Moderating | First monthly decline in four months |
| E-Commerce | Positive YoY | Volatile | June surge partly reversed |
| Value / Discount | Strong signal | Strengthening | Increasing evidence across major retailers |
Monthly retail data can be volatile, making direction more informative when several observations support it. Health & Beauty and Apparel & Fashion currently provide the clearest positive signals, while grocery volumes remain persistently weak.
Building materials illustrate the opposite distinction: the category remains weak year over year, but four consecutive monthly increases indicate improving sequential momentum.
Market Segment Signals: Value Moves Deeper Into Retail Strategy
Statistics Canada does not separate retail activity into Luxury, Premium, Mid-Market, Value, Discount or Off-Price segments, but company reporting provides useful evidence about how retailers are responding to changing consumer behaviour.
Value is increasingly visible in decisions extending beyond short-term promotions. Loblaw continues to expand hard-discount grocery and emphasize private label. METRO is converting conventional supermarkets to Food Basics while growing its discount network. Canadian Tire has used pricing analysis to lower prices on more than 5,000 products, while Leon’s has observed middle-market customers moving toward lower opening price points.
These actions show value considerations influencing store investment, banner strategy, merchandise architecture and pricing decisions.
Premium demand has not disappeared, and strong real growth across apparel, health and several other categories argues against interpreting the market as a universal trade-down story. Retailers are allocating more resources to price-sensitive consumers while preserving opportunities at higher price points.
Regional Retail Signals
Retail performance diverged considerably across Canada in July.
| Geography | MoM | YoY |
|---|---|---|
| Canada | -0.7% | +5.1% |
| Newfoundland and Labrador | -1.5% | +15.1% |
| Prince Edward Island | +0.2% | +9.4% |
| Nova Scotia | +0.6% | +7.1% |
| New Brunswick | +1.6% | +6.5% |
| Quebec | ~0.0% | +3.9% |
| Montréal | +1.3% | +4.1% |
| Ontario | -2.0% | +4.9% |
| Toronto | -4.7% | +2.4% |
| Manitoba | -0.4% | +6.3% |
| Saskatchewan | +0.5% | +4.6% |
| Alberta | +1.4% | +9.7% |
| British Columbia | -1.4% | +1.5% |
| Vancouver | -1.6% | -0.8% |
Toronto recorded the sharpest reversal among Canada’s major metropolitan markets, falling 4.7% after increasing 3.9% in June. Sales remained 2.4% above July 2025, making the latest result more consistent with a reversal of June’s unusually strong increase than a sustained contraction.
Vancouver’s pattern is weaker. Sales declined 1.6% in July and were 0.8% below a year earlier, following a June result that was also slightly negative on both a monthly and annual basis. The additional month strengthens the evidence of persistent softness.
Alberta moved in the opposite direction, with sales increasing 1.4% from June and 9.7% year over year. That places the province well ahead of Ontario, Quebec and British Columbia on annual growth.
Retail sales by geography do not measure shopping-centre traffic or leasing performance directly, but the divergence is relevant to retailers and property owners assessing regional demand.
Channel Monitor: E-Commerce and Fulfilment Strategy
Canadian retail e-commerce sales declined 3.5% from June to $5.49 billion in July, representing 7.5% of total retail trade. The decline followed June’s 9.9% increase, when online sales reached 7.7% of retail activity.
July e-commerce sales were still 6.0% higher than a year earlier. Taken together, the two months suggest normalization following June’s unusually large increase, with the longer-term digital growth signal still intact.
Individual retailers continue to report stronger online growth. Loblaw’s e-commerce sales increased 19.3% in its latest quarter, Canadian Tire reported growth of approximately 14%, and METRO’s online food sales increased 16.3%.
How those orders are fulfilled is becoming increasingly important. METRO plans to close its Montréal automated e-commerce fulfilment centre and shift more volume toward store-based picking and third-party delivery, with same-day service and lower fixed costs forming part of the strategy.
As Canadian e-commerce matures, fulfilment economics and delivery speed may increasingly matter as much as online penetration itself. For Retail Insider’s Retail Technology outlook, the evolution of these operating models warrants continued attention.
What Canadians Were Buying
Statistics Canada’s Retail Commodity Survey tracks products sold rather than the industries selling them, providing a useful cross-check against the Retail Trade data.
The latest available figures cover June and are not seasonally adjusted. Total retail commodity sales increased 7.2% from June 2025, with several of the strongest categories aligning with signals elsewhere in the Monitor.
Home health product sales increased 15.9%, jewellery, watches and luggage rose 14.8%, sporting and leisure products increased 9.1%, and infant care, personal and beauty products rose 9.1%. Clothing increased 8.0%, while footwear rose 3.3%.
Home furniture, furnishings, housewares, appliances and electronics increased 3.4%, while hardware, tools, renovation and lawn-and-garden products increased 1.6%.
The commodity data reinforce the broader picture of strength in health-related products, apparel, jewellery and sporting goods, alongside more subdued growth across several home-related categories.
Inflation Adds Context to Retail Performance
Canada’s all-items Consumer Price Index increased 3.0% year over year in August, unchanged from July. Grocery inflation eased to 2.8%, while clothing prices declined 1.1% from a year earlier.
The impact on retail performance differs sharply by category. Apparel-related volumes increased 8.3% in July while nominal sales rose 6.0%, consistent with consumers purchasing more goods without equivalent price growth.
Gasoline provides the reverse example: retail spending increased 20.2% from a year earlier while volumes fell 9.3%. Grocery sits between the two, with price growth slowing substantially while retail volumes remain negative.
These differences reinforce the importance of evaluating Canadian retail growth in both current dollars and real purchasing volumes.
What to Watch in August
Statistics Canada’s advance estimate suggests retail sales increased approximately 1.3% in August, potentially reversing July’s decline. The final results will help determine whether July was primarily a correction following June’s strong performance or the beginning of a weaker period for consumer demand.
Volumes will be particularly important because the advance estimate measures current-dollar sales. General merchandise, grocery and building materials will also warrant attention, particularly whether building materials extend their four-month sequence of monthly gains.
Regional results will show whether Toronto recovered from July’s sharp reversal and whether Vancouver’s weakness persisted. E-commerce will provide another test after June’s surge and July’s partial normalization.
Retail Insider Takeaway
Canadian retail entered the second half of 2026 with growth intact but increasingly concentrated across particular categories. July was broadly weaker than June, yet the historical evidence does not currently support interpreting the result as the beginning of a sustained retail downturn.
The more important development is the widening real-demand divide. Health & Beauty continues to generate strong purchasing growth, Apparel & Fashion is strengthening, and General Merchandise remains solid despite monthly volatility. Grocery volumes remain under pressure, while Home Furnishings and Electronics & Appliances continue to face weaker conditions.
Retail strategy is adjusting to that environment. Discount-banner expansion, store conversions, pricing initiatives, private label and lower opening price points show value considerations moving deeper into operating and investment decisions across several major retailers.
For retailers, landlords, brokers and suppliers, the Canadian market remains active but increasingly differentiated by category, geography and price point. Strong real demand is present in several important sectors, but headline sales growth alone increasingly fails to show where that demand is occurring.
