By Ed Strapagiel
After hitting a 20 year high last year, overall Canadian retail sales growth has eased off in recent months. For the 3 months ending January 2018, total sales were up 5.3% year-over-year. While still quite respectable, this is down from the 6.7% increase recorded for 2017.
The underlying 12 month growth trend (green line in the chart above) has now gone flat and is likely to weaken further. The 3 month growth trend (orange line) has been declining since mid 2017. This pattern is occuring to one extent or another in all the major retail sectors.
Food & Drug
The underlying 12 month trend for Food & Drug retail sales (green line in the above chart) slid steadily in 2017. The 3 month trend is tracking below this, implying further weakness ahead.
Sales at supermarkets & other grocery stores have been particularly slow, increasing a mere 0.4% year-over-year for the 3 months ending January 2018. This is less than inflation, and even less than population growth. It appears that combination stores (like Costco and Walmart, whose sales fall under the other general merchandise stores) are continuing to take share away from conventional grocers. On the other hand, specialty food stores are enjoying increased sales, gaining 9.9% in the last 3 months.
Health & personal care stores' retail sales are also slipping. Sales were up 3.1% for the 3 months ending January 2018, markedly lower than the 5.7% annual gain recorded for 2017.
After hitting some record highs last year, retail sales growth in the Store Merchandise sector appears to be coming back down to earth. The 3 month sales growth trend has now dipped under the underlying 12 month trend, which is now poised to go south.
But there still are some shining stars in this sector. Electronics & appliance stores gained a whopping 18.0% year-over-year for the 3 months ending January 2018, while building material & garden equipment/supplies dealers gained 9.4%.
Furniture store sales however were down 0.8% on a last 3 months basis, and home furnishings stores eked out only a 0.1% gain.
Note that Statistics Canada is now suppressing the breakdown of general merchandise stores for confidentiality reasons. The figures in the table below are estimates based on previous trends.
Automotive & Related
Retail sales in the Automotive & Related sector also appear to be softening. For the 3 months ending January 2018, sales increased 7.4%, which would normally be a very good result. On the other hand, it was lower than any such comparable gain in 2017.
New car dealers' sales were up "only" 4.9% for the 3 months ending January 2018. This however is about half of the 9.4% sales gain achieved in 2017.
On the other hand, gas stations are continuing to enjoy high retail sales increases, up 12.3% on a last 3 months basis. Of course, this is due to increases in pump prices for gasoline.
By The Numbers
For definitions of store types, see Statistics Canada NAICS.
Canadian E-Commerce Stats
StatsCan started providing ecommerce retail sales data in January 2016. While the amount of data is limited, some trends appear to be emerging. Here are some results.
Overall, e-commerce represented about 2.6% of Canadian retail sales for the 12 months ending January 2018, including both pure play operators as well as the online operations of brick & mortar stores. Canadian consumers however also buy online from foreign websites, spending which is not captured in these numbers.
Canadian e-commerce sales were up 15.1% year-over-year for the 3 months ending January 2018. This however is only half of the 30.8% annual increase recorded for 2017 over 2016, indicating that e-commerce sales growth may be slowing down.
Note that location based retail is the same as that in the preceding large "By The Numbers" table. It's what's normally reported as Canadian retail sales. Except that it isn't. Location based retail excludes another section called Non-Store Retailers (NAICS code 454), which covers electronic shopping and mail-order houses, which in turn is where (mostly) pure play e-commerce businesses are. For the 12 months ending January 2018, electronic shopping and mail-order houses had an estimated $8.98 billion in e-commerce sales.
But that's not the only source of e-commerce, as (mostly) bricks & mortar location-based retailers also sell online. For the 12 months ending January 2018, this group had an estimated $6.86 billion in e-commerce sales. With electronic shopping and mail-order houses, there's a grand total of $15.67 billion in e-commerce sales by Canadian operators over the year. Note that this does not include foreign e-commerce purchases made by Canadian consumers, but it does include purchases made by foreigners at Canadian e-commerce businesses.
For electronic shopping and mail-order houses, an estimated 82.9% of their sales are allocated to e-commerce. For the (mostly) bricks & mortar crowd, it can be estimated that just 1.2% of their total sales come from e-commerce.
In the final section of the above table, (mostly) pure play operators (namely, under electronic shopping and mail-order houses) generated an estimated 56.7% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers' share of e-commerce is 43.3%.
For more explanation on the e-commerce numbers, see Statistics Canada: Retail E-commerce in Canada.
This analysis is updated monthly as new numbers are published by Statistics Canada. If you would like notification of when an update becomes available (and you've read this far), please connect with Ed Strapagiel on LinkedIn.