By Ed Strapagiel

Last year, in 2017, total Canadian retail sales growth was up 6.7%, a 20 year high. But the latest numbers from Statistics Canada show that sales gained 4.1% year-over-year in the first 2 months of 2018, significantly less. In fact, this soft patch appears to have started last December.

As a result, the 3 month growth trend (orange line in the chart above) has sunk to a level lower than at any point last year. The underlying 12 month growth trend (green line) has now peaked out and is due to soften even more going forward. Poor spring weather across much of the country does not bode well for retail sales results in the next few months.

The 3 month retail sales trend in the Food & Drug sector has now sunk to a 4 year low. The underlying 12 month trend has been softening since late 2016, and is poised to deteriorate further as we go deeper into 2018.

Retail sales at supermarkets & other grocery stores represent half of this sector, but they were up by only 0.6% for the 3 months ending February 2018. Specialty food stores are doing well, with double digit sales gains in recent months, but this group is too small to offset the slow growth at mainstream supermarkets and grocers.

After enjoying some high retail sales gains in 2016 and 2017, health & personal care stores have slowed down considerably. Their sales were actually down 0.1% year-over-year for the 3 months ending February 2018. Health & personal care stores at one time were the champions of the Food & Drug sector, but it appears those days are gone.

The Store Merchandise sector seems to have run into some strong headwinds at the start of 2018, after having posted strong retail sales gains over much of last year. The 3 month sales growth trend has slowed to 4.6%, which is historically "not bad", but now is running decidedly below the underlying 12 month trend. At this pace, the sector is unlikely to repeat its strong 2017 performance in 2018.

The laggards in this sector include furniture and home furnishings stores (retail sales were up a meagre 0.3% for the 3 months ending February 2018), clothing and clothing accessories stores (up just 1.5%), and general merchandise stores (up a below average 2.6%).

On the other side of the coin, electronics & appliance stores gained a huge 20.1% year-over-year for the 3 months ending February 2018, while building material & garden equipment/supplies dealers gained 7.8%.

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 is also weakening after a hot 2017. The 3 month trend has dropped off dramatically in last couple of months, although sales gains are still above the overall retail average.

The main change is in new car dealers. Their year-over-year retail sales gain was just 2.8% for the 3 months ending February 2018, which is less than a third of the 9.4% increase recorded for 2017.

This was partially offset by gas stations, whose retail sales increased 9.9% during the same period. This gain is all due to rising gasoline prices.

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.

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.% of total Canadian retail sales for the 12 months ending February 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, spending which is not captured in these numbers.

Canadian e-commerce sales were up 12.8% year-over-year for the 3 months ending February 2018. This however is significantly less than the 27.4% annual increase recorded for 2017 over 2016, implying that e-commerce sales 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 January 2018, electronic shopping and mail-order houses had an estimated $9.08 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 February 2018, this group had an estimated $6.93 billion in e-commerce sales. With electronic shopping and mail-order houses, there's a grand total of $16.02 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 purchases made by foreigners at Canadian e-commerce businesses.

For electronic shopping and mail-order houses, an estimated 85.3% of their sales are allocated to e-commerce. For the (mostly) bricks & mortar crowd, 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 56.7% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers' share of e-commerce is 43.3%.

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