Overall Canadian retail sales have moved up smartly in recent months, according to the latest numbers from Statistics Canada. But it probably won’t last. A second COVID surge is now prompting a new round of lockdowns, which will possibly be more severe than before. Ontario, which accounts for about 37% of retail sales in the country, has already announced new lockdown measures to last until January 23.
Over the 3 months ending October 2020, Canadian retail sales were up 6.0% year-over-year. This was the highest such result since 2017, but it was not enough to offset the declines earlier in the year. For 2020, year-to-date retail sales are still down 2.5% versus a year ago, and things are likely to improve only marginally by year end.
Food & Drug
The Food & Drug sector has been reporting high year-over-year retail sales gains. For the 3 months ending October 2020, retail sales were up 8.4% over the same period a year ago, and year-to-date sales are up 8.3% after 10 months. Food & Drug is poised to have a record year in 2020.
Supermarkets & other grocery stores continue to enjoy high retail sales growth. Their sales gained 9.5% year-over-year for the 3 months ending October. Year-to-date sales after 10 months of 2020 are up 11.5%, the highest of any retailer type. Convenience stores, specialty food stores, and beer, wine & liquor outlets are also having strong retail sales gains.
Health and personal care stores were the poor cousins of the sector earlier in the year but now appear to be strengthening. Their retail sales were up 6.7% for the 3 months ending October 2020.
After a precipitous decline in Q2, the Store Merchandise sector now seems to be reaching for the top, with retail sales up a very healthy 9.5% for the 3 months ending October 2020. The 3 month trend (orange line in the chart) continues to strengthen and appears to be heading for an all-time high. The underlying 12 month trend (green line) is also improving.
But looks can be deceiving. Store Merchandise is likely to be negatively impacted by the new COVID surge and subsequent retailer and shopping mall lockdowns. I’m dreaming of a slow Christmas. At least this time around many retailers should be better prepared with options like online selling, direct delivery, and curbside pickup.
Many retailer types had strong recent retail sales growth, including general merchandise, furniture stores, electronics & appliance stores, building material & garden equipment/supplies dealers, and even the miscellaneous store retailers.
On the other hand, clothing and clothing accessories stores are simply failing to bounce back. Their sales declined 11.9% for the 3 months ending October.
Automotive & Related
The Automotive & Related sector now appears to be rising from the dead, although it still remains weak. The 3 month trend finally crossed into positive territory with a 1.0% gain in October, but this is well behind other areas of retail.
Improving retail sales at automobile dealers are the main reason behind these results. Their sales were up 5.8% for the 3 months ending October, which is quite a comeback from down 31.7% in Q2 2020.
Retail sales at gasoline stations however continue to languish. They declined 14.6% year-over-year for the 3 months ending October, although this was better than the 35.1% drop recorded for Q2. Gas stations are the single largest drag on overall Canadian retail sales.
By The Numbers
Note that the data and analysis in this report are always based on not seasonally adjusted (or unadjusted) retail sales statistics.
For definitions of store types, see Statistics Canada NAICS.
Canadian E-Commerce Sales
The chart above shows that Canadian e-commerce retail sales doubled year-over-year in Q2 2020 with the onset of the COVID pandemic. That has since cooled off somewhat, but to “only” a 68.5% increase for the 3 months ending October. By any measure, this is still red hot growth.
Overall, e-commerce represented about 5.4% of Canadian retail sales for the 12 months ending October 2020, including both pure play as well as brick & clicks stores. Note that Canadian consumers may also buy online from foreign websites which is not captured in these numbers.
Location based retail is the same as that in the preceding “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 includes electronic shopping and mail-order houses, which in turn is where (mostly) pure play e-commerce businesses are. For the 12 months ending October 2020, electronic shopping and mail-order houses had an estimated $20.7 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 October, this group had an estimated $12.9 billion in e-commerce sales. With electronic shopping and mail-order houses, there’s a grand total of $33.7 billion in e-commerce sales by Canadian operators. 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 operations.
For electronic shopping and mail-order houses, an estimated 92.7% of their sales are allocated to e-commerce. For (mostly) bricks & mortar retailers, it can be estimated that 2.2% of their total sales are attributable to 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 61.6% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers’ share of e-commerce was 38.4%.
For more explanation on the e-commerce numbers, see Statistics Canada: Retail E-commerce in Canada.