The Future Outlook of Canadian Retail E-Commerce

By Devin Partida

Canadian retailers have faced a period of unprecedented change amid the COVID-19 pandemic. Most notably, retail e-commerce exploded in early 2020 as lockdowns limited the availability of brick-and-mortar stores. Now, as the year nears its end, Canadian e-commerce has slowed but isn’t stopping.

In the early days of the pandemic, e-commerce seemed like an unstoppable force. Between February and May alone, online sales almost doubled while in-person shopping continued to fall. Since then, the market has started to rebalance as lockdown restrictions have eased.

E-Commerce Won’t Replace In-Person Retail

E-commerce’s share of total retail sales more than doubled between 2019 and early 2020. To some, this unprecedented rise indicated the beginning of an inevitable shift — online stores surpassing brick-and-mortar alternatives. As the nation has continued to get a better handle on the pandemic, that hasn’t been the case.

Since May, Canadian retail trade has grown, recovering from its slump in April. Overall retail sales are nearing pre-pandemic levels, and e-commerce has played a diminishing role in that recovery. While retail e-commerce sales are still higher than 2019 levels, they’ve declined since their May peak.

Now that in-store shopping is more accessible, consumers have switched back to it. It seems that customers still prefer brick-and-mortar stores, even if e-commerce is more widely available than before. The early surge in online sales was a matter of necessity rather than consumer preference.

Retail E-Commerce Will Keep Growing, But Slower

While retail e-commerce hasn’t reached the dizzying heights some expected, it will continue to grow. Canadian retailers are now keenly aware of the advantage that online channels present, especially in an emergency. Retailers will sustain their e-commerce sites, and customers, now accustomed to online shopping, will keep using them.

Experts predict online sales to keep growing each year but at a diminished rate. According to one survey, Canadian e-commerce sales growth will fall to 7.7% in 2021 and keep declining through 2024. The astronomical e-commerce growth of mid-2020 isn’t indicative of the industry’s future.

While e-commerce’s growth rate will eventually decline, it’ll stay positive for the foreseeable future. The COVID-19 pandemic has proved how helpful a resource online shopping is for both retailers and consumers. As time goes on, e-commerce will play an increasingly prominent role in Canadian retail, but it won’t skyrocket.

E-Commerce Itself Will Continue Evolving

As e-commerce continues to grow, it’s changing along with retail itself. Now that online stores have become an industry standard, it’s no longer enough to merely have an e-commerce site. Retailers must optimize their online channels to stay competitive, just as they do with brick-and-mortar stores.

While generic packaging is the standard now, 52% of online shoppers who receive branded packaging will become return customers. Retailers will likely shift toward custom features like branded packaging or unique website design. Online channels will start reflecting their brick-and-mortar counterparts as it becomes harder to stand out.

Similarly, mobile retail sales are also growing, so more retailers will likely optimize for mobile devices. In the future, e-commerce sites could also feature more varied payment options, even accepting cryptocurrency. Flexibility has been the primary benefit of e-commerce amid COVID-19, so e-retailers will pursue it in their online channels.

Despite Its Decline, Online Shopping Is Here to Stay

Canadian retail e-commerce will not replace brick-and-mortar stores and won’t come close anytime soon. The meteoric rise of online shopping Canada saw earlier this year won’t continue, but e-commerce will keep growing. Online retail is more prominent than ever, and it’s not going away.

E-commerce will continue to become a more crucial part of retail over the next few years. The pandemic has favoured retailers with a strong online presence, and the industry has learned from that experience. As e-commerce continues to grow and evolve, it will help sustain retail for years to come.