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Canadian Retail Sales Improve? It's Mostly Gas

The Automotive & Related sector, especially gasoline stations, continues to lead Canadian retail, according to the latest numbers from Statistics Canada for April 2017. After 4 months or 1/3 of the year, total retail sales are up 5.5% year-to-date. This would normally be a good result, and the chart above implies Canadian retail sales trends are steady to improving. But this is mostly due to gas station sales, which are up over 20% so far this year.

On the other hand, Store Retail (all retailers excluding Automotive & Related) is not nearly as strong, with year-to-date sales up a more modest 3.0%. Retail sales trends here are not nearly as robust, as per the chart below.

The 3 month trend (orange line in the above chart) has tracked below the underlying 12 month trend (green line) for most of the last 9 months. The 12 month trend continues to slowly weaken and now stands at 3.7%, the lowest it's been in over 2 years.

Food & Drug

The underlying 12 month trend (green line in the above chart) in the Food & Drug sector peaked at the end of last year and has been declining ever since. The 3 month trend (orange line) has also weakened significantly, implying more trouble ahead. Retail sales in Food & Drug increased 5.6% in 2016, but are up a scant 1.8% year-to-date so far in 2017.

Supermarkets and other grocery stores are the main problem in this sector. After 4 months of 2017, their year-to-date retail sales are unchanged versus last year, at a flat 0.0% (rounded up from -0.02%). Other food and beverage stores have not done much better or are too small a group to make much difference.

In the past, health & personal care stores tended to offset weak results in food & beverage, but this effect now appears to be diminishing. Year-to-date retail sales at health & personal care stores were up 5.7% after 4 months in 2017. This would normally be a good result, except that it's less than half of the 13.8% annual gain posted in 2016.

Store Merchandise

The underlying 12 month trend (green line in the chart above) in the Store Merchandise sector has been slowly weakening for the last 2 years. The 3 month trend (orange line) has shown some life recently, but we've been disappointed before – in both 2015 and 2016, a sales surge early in the year soon petered out. After 4 months of 2017, year-to-date retail sales in store merchandise are up 4.2%, which is on par with performance in recent years.

All retailer types had positive sales growth for the first 1/3 of 2017. But some had more than others, including electronics and appliance stores (up 10.4% year-to-date), building material and garden equipment & supplies dealers (up 8.0%), and sporting goods, hobby, book and music stores (up 6.4%).

General merchandise stores however were up just 1.7% year-to-date, and they account for 1/3 of this sector's retail sales. On the other hand, even this modest result is an improvement over the mere 0.7% retail sales gain at general merchandise stores for all of 2016.

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

The Automotive & Related sector is leading Canadian retail with a 9.5% year-to-date sales gain after the first 4 months of 2017. This is over twice as high as Store Merchandise, and about 5 times the pace of the Food & Drug sector.

Pump prices are the main factor in pushing up sales in this sector. Gasoline station retail sales increased 20.7% year-to-date so far in 2017. This inflates and distorts overall total retail gains.

Automobile dealers' sales were up 5.7% year-to-date. This actually represents a cooling off compared to recent years, including gains of 7.9% and 9.4% in 2015 and 2016 respectively.

By The Numbers

For definitions of store types, see Statistics Canada NAICS.

Canadian E-Commerce Stats

StatsCan is now providing new data on ecommerce retail sales. There is not enough information yet to consider trends, 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 about 2.3% of Canadian retailers' sales for the 12 months ending April 2017, including both pure play operators as well as the online efforts of brick & mortar stores. Canadian consumers however also buy online from foreign websites, spending which is not captured in these numbers.

Year-to-date results for 2017 results show that Canadian e-commerce sales are running 40.3% from a year ago, a much higher gain than for retail in general.

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 includes electronic shopping and mail-order houses, which is where (mostly) pure play e-commerce players are. For the 12 months ending April, electronic shopping and mail-order houses had an estimated $7.8 billion 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 12 months ending April, this group had an estimated $5.5 billion in e-commerce sales. Added to electronic shopping and mail-order houses gives a grand total of $13.3 billion in e-commerce sales by Canadian operators over a 12 month period. 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 estimated that just 1.0% 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, under electronic shopping and mail-order houses) generate an estimated 58.5% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers' share of e-commerce is 41.5%.

For more explanation on the e-commerce numbers, see Statistics Canada: Retail E-commerce in Canada.

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.

24 June 2017