Canadian Retail Sales Take a Dive

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By Ed Strapagiel

Total Canadian retail sales gained only 2.6% year-over-year for the 3 months ending April 2018 on a not seasonally basis, according to the most recent Statistics Canada data. This was the slowest 3 month growth since mid 2015. Furthermore, all major retail sectors and most retail store types are suffering the same fate. 

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The 3 month growth trend (orange line in the chart above) in fact started deteriorating last December, and has just continued to weaken ever since. The underlying 12 month growth trend (green line) has now turned downward, and is on track to weaken further in the next few months. 

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The Food & Drug sector's retail sales were up only a scant 0.2% year-over-year for the 3 months ending April 2018, the lowest consecutive 3 month gain in almost 7 years. As this measure weakens, the underlying 12 month trend is also headed downward, and without any relief in sight. 

Supermarkets & other grocery stores, which represent half the business in this sector, are leading the downward charge with a retail sales decline of 1.1% for the 3 months ending April 2018. The one bright spot was specialty food stores where retail sales increased 9.0% during the period, but this group is too small to offset the weakness at mainstream food retailers. 

Health & personal care stores are only adding to the sector's woes. Their retail sales were down 0.9% for the 3 months ending April 2018, almost as bad as supermarkets & other grocery stores. 

In Q1 2018, Store Merchandise emerged as the sales growth leader versus the other retail sectors. Year-over-year retail sales were up 5.8%. On the other hand, this was lower than the 6.9% gain posted for last year, and momentum appears to be softening. After a meteoric rise in 2017, the underlying 12 month growth trend (green line in the above chart) now appears to be peaking out. 

The top Q1 performers in the sector were electronics & appliance stores with retail sales up 14.9%, and building material & garden equipment/supplies dealers gaining 7.5%. 

At the other end of the scale, retail sales at shoe stores declined 2.3% in Q1, while furniture stores were up only 1.0%. 

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. 

The Automotive & Related sector used to be the Cinderella of Canadian retail sales, but the clock struck midnight at the end of 2017. Retail sales were up 3.8% year-over-year for the 3 months ending April 2018, which was the lowest such gain in a year and a half. 

The main culprit is to be new car dealers, whose sales were up just 1.0% for the 3 months ending April 2018. This is a mere shadow of the 9.4% annual increase recorded last year. 

Retail sales at gasoline stations did increase 9.6% in comparison, thanks to higher pump prices, but this was not nearly enough to compensate for mediocre new vehicle sales. When you pay more for gas, your car doesn't go any further and the ride isn't any better – you just have less money for everything else. 

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By The Numbers

Special Note: Statistics Canada has made updates to 2017 numbers, and has also moved retail storefronts of telecom companies out of electronics & appliance stores and into a non-retail category, Telecommunications (NAICS 513). Retail trade statistics have been revised back to January 2012. 

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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 2.7% of total Canadian retail sales for the 12 months ending April 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 which is not captured in these numbers. 

Canadian e-commerce sales were up 12.3% year-over-year for the 3 months ending April 2018, but this is less than half the 28.8% gain recorded in the same period a year ago. While e-commerce retail sales gains are still in double digit territory, it appears that their 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 April 2018, electronic shopping and mail-order houses had an estimated $9.27 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 April 2018, this group had an estimated $7.02 billion in e-commerce sales. With electronic shopping and mail-order houses, there's a grand total of $16.29 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 e-commerce purchases made by foreigners at Canadian businesses. 

For electronic shopping and mail-order houses, an estimated 83.1% of their sales are allocated to e-commerce. For (mostly) bricks & mortar retailers, 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 56.9% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers' share of e-commerce is 43.1%. 

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

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