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Canadian Retail Sales Just Crawling Along

(If you prefer to go straight to the e-commerce section, you can click New Canadian E-Commerce Stats.)

Recent headlines in the trade press imply that Canadian retail sales bounced back in October 2016, according to the most recent Statistics Canada data. But this might be overstating the case. On a not seasonally basis, Canadian retail sales were up only 0.4% from the same month a year ago. This is in fact an unusually low annual gain, even in an era of modest inflation.

The 3 month trend (orange line in the above chart) continues to track below the underlying 12 month trend (green line), so one can expect further weakness ahead. Furthermore, sluggish sales seem to be affecting a broad variety of store types.

Food & Drug

Retail sales in the Food & Drug sector were actually down 1% in October 2016 on a year-over-year basis, a low point for 2016. This was led by a 3.4% decline at supermarkets and other grocery stores, which account for over half of the sales in the sector. Specialty food stores also had a poor month, with sales off 5.9% from a year ago.

Health & personal care stores usually shore up the Food & Drug sector, but their sales were up only 2.9% on October. This wasn't enough to offset the sales declines at grocery stores.

Store Merchandise

Store Merchandise retail sales were up 2.1% year-over-year in October. This was a low point for Store Merchandise in 2016, but still a higher growth rate than the other two major retail sectors. It was a tough month all around.

A number of retailer types actually had year-over-year sales declines on October, including jewellery, luggage & leather goods stores (down 3.0%), home furnishings stores (down 1.7%), electronics & appliance stores (down 1.2%), and clothing stores (down 0.8%). Only shoe stores seemed to buck the trend, with a 5.8% retail sales 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

For the first time in almost 2 years, gasoline station retail sales increased in October 2016, up 2.2% year-over-year. This is almost all due to pump prices edging up.

On the other hand, this was offset by a 1.1% sales decline at new car dealers. This compares to double digit increases at the start of 2016.

Putting both together results in a flat 0% year-over-year change for the Automotive & Related sector in October.

By The Numbers

For definitions of store types, see Statistics Canada NAICS.

New Canadian E-Commerce Stats

StatsCan is now providing new data on ecommerce retail sales. There is not enough information yet to consider trends or even growth rates, but we can add up the figures to at least get some sense of size and share. Here are the results.

Overall, e-commerce represents 2.1% of Canadian retail sales in the first 10 months of 2016. That's a drop in the bucket.

First, one has to get a handle on just what these measures are. Location based retail is the same as that in the preceding large "By The Numbers" table. It's what is normally taken and reported as Canadian retail sales. Except that it isn't. Location based retail does not include another section called Non-Store Retailers (NAICS code 454), which includes electronic shopping and mail-order houses, which is where (mostly) pure play e-commerce players are. For the first 10 months of 2016, electronic shopping and mail-order houses had an estimated $5,849 million in e-commerce sales.

But that's not the only source of e-commerce retail sales, because (mostly) bricks & mortar location-based retailers also sell online. For the first 10 months of 2016, this group had an estimated $3,419 million in e-commerce sales. Added to electronic shopping and mail-order houses gives a grand total of $9,268 million in e-commerce sales by Canadian operators for the first 10 months of 2016. 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 82.5% of their sales are allocated to e-commerce. For the (mostly) bricks & mortar crowd, it can be calculated that just 0.8% of their total sales come from e-commerce.

In the final section of the above table, it is seen that (mostly) pure play operators (namely, electronic shopping and mail-order houses) generated 63.1% of all e-commerce sales in Canada in the first 10 months of 2016. The (mostly) bricks & mortar location-based retailers' share of e-commerce was 36.9%.

Monthly Update Notification

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.

27 December 2016