By Ed Strapagiel

The latest data from Statistics Canada show that total Canadian retail sales gained 3.9% year-over-year in the first quarter of 2018 on an unadjusted basis. In the big scheme of things, this is on the low side but not a complete disaster. Nevertheless, Q1 2018 is the lowest growth quarter in about a year and a half, and the same thing seems to be happening in most retail sectors and retail business types. Retailers who planned on 2018 being as good as last year may be in for a rude awakening.

As the above chart shows, the 3 month growth trend (orange line) has fallen to a lower point than at any time last year. The underlying 12 month growth trend (green line) is softening and is likely to decline further.

Easter Sunday in 2018 was on April 1 (versus April 16 last year). Much of the shopping for it would have occurred in March, which should have given the Q1 numbers a bit of a boost. Apparently that didn't happen.

Retail sales in the Food & Drug sector gained only 1.8% year-over-year in Q1 2018. Growth is hovering around a 4 year low. As a result, the underlying 12 month trend is also weakening, and is likely to get even softer in the next several months.

Retail sales at supermarkets & other grocery stores were up by a scant 0.04% year-over-year in Q1 2018, which accounts for most of the poor results for the sector overall. The small specialty food stores group however was a major exception, with retail sales increasing a whopping 17.0% in the quarter.

Health & personal care stores were another disappointment, with retail sales increasing just 0.9% in Q1 2018 versus a year ago. This retail group at one time was the main retail sales growth driver of the overall Food & Drug sector.

In Q1 2018, Store Merchandise emerged as the sales growth leader versus the other retail sectors. Year-over-year retail sales were up 5.8%. On the other hand, this was lower than the 6.9% gain posted for last year, and momentum appears to be softening. After a meteoric rise in 2017, the underlying 12 month growth trend (green line in the above chart) now appears to be peaking out.

The top Q1 performers in the sector were electronics & appliance stores with retail sales up 14.9%, and building material & garden equipment/supplies dealers gaining 7.5%.

At the other end of the scale, retail sales at shoe stores declined 2.3% in Q1, while furniture stores were up only 1.0%.

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 high flying Automotive & Related sector is coming back down to earth. The 3 month trend is now well below where it was at any point in 2017. For Q1 2018, retail sales gained a modest 4.0%, less than half the annual gain last year. The underlying 12 month trend is now weakening as well.

Sales have slowed significantly at new car dealers, which account for over half of the the sector. The year-over-year increase for Q1 2018 was just 1.2%, a fraction of the 9.4% increase recorded for 2017.

Due to rising pump prices, gasoline stations' retail sales increased 8.7% in Q1, but this only partially offset the weakness in new vehicle sales.

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 2.7% of total Canadian retail sales for the 12 months ending March 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 14.8% year-over-year in Q1 2018. While this looks like a strong gain, it's actually down from the 27.4% annual increase recorded for 2017. While it still remains high, it appears that e-commerce retail 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 March 2018, electronic shopping and mail-order houses had an estimated $9.18 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 March 2018, this group had an estimated $6.99 billion in e-commerce sales. With electronic shopping and mail-order houses, there's a grand total of $16.17 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 83.0% of their sales are allocated to e-commerce. For (mostly) bricks & mortar retailers, 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 56.8% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers' share of e-commerce is 43.2%.

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