By Ed Strapagiel

Another month of Statistics Canada numbers show another month of ho-hum Canadian retail sales growth. For the 3 months ending July, total Canadian retail sales were up 4.4% on a non-adjusted basis. That's "sort of okay", but nothing to be excited about.

The 3 month growth trend (orange line in the chart above) does appear to be recovering but is still below any time in 2017. The underlying 12 month trend (green line) has been steadily weakening since Q3 last year.

Another concern is that rising gas prices are distorting the picture. If gasoline stations are taken out (per the chart below), then Canadian retail sales growth is even weaker, up only 3.0% for the 3 months ending July.

Food & Drug

The Food & Drug sector appears to be in particularly bad shape. For the 3 months ending July 2018, retail sales gained only 0.6% versus a year ago, which is significantly less than inflation and population growth. The 3 month growth trend (orange line) is at historical low levels, and the underlying 12 month trend (green line) continues to weaken.

The two largest store types in this sector are continuing to post retail sales declines. For the 3 months ending July, supermarkets & other grocery stores' sales were down 0.7% year-over-year, while health & personal care stores were down 1.1%, which might be some kind of dubious record.

Convenience stores' retail sales were up 7.8% in the same period, and specialty food stores gained 7.3%. These are relatively small groups however and were not nearly enough to save the overall Food & Drug sector.

Store Merchandise

Retail sales growth in the Store Merchandise sector has come down from the highs recorded last year. Nevertheless, current growth levels are still ahead of the 2014 to 2016 period. For the 3 months ending July, retail sales increased a respectable 5.0% year-over-year – good but not great.

The 3 month growth trend (orange line in the chart above) has been declining since mid 2017, although the most recent results indicate that this may now be stabilizing. The underlying 12 month trend (green line) has also weakened but may be about to steady out.

Electronics & appliance stores continue to lead the Store Merchandise sector, with retail sales up 8.9% tear-over-year for the 3 months ending July (miscellaneous store retailers had a higher increase of 9.9%, but it's difficult to know just who they are). Clothing stores also did well, with retail sales up 7.7% during the period.

Some other store types however tended to hold back the group. Retail sales growth actually declined at home furnishings stores by 0.8% in the 3 months ending July, while sporting goods, hobby, book and music stores gained only 0.4%.

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 wild ride in the Automotive & Related sector continues. Retail sales growth was up to 6.6% for the 3 months ending July, but this is a result of a push-pull effect of its two largest components.

New car dealers' retail sales were up 9.4% last year, but growth has slowed considerably in 2018. Their sales gained only 2.0% versus a year ago over the 3 months ending July.

This however was more than offset by high retail sales gains at gasoline stations, whose sales increased 16.8% in the same period. This accounts for the apparent recovery in Automotive & Related the above chart implies, but it's all due to increases in gas prices at the pump.

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.

Canadian E-Commerce Sales

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 2.8% of total Canadian retail sales for the 12 months ending July 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 which is not captured in these numbers.

Canadian e-commerce sales were up 15.7% year-over-year for the 3 months ending July 2018, but this is much less than the 37.0% gain recorded in the same period a year ago. E-commerce retail sales gains are still in double digits, and are still much higher than for location based retail, but growth is 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 includes electronic shopping and mail-order houses, which in turn is where (mostly) pure play e-commerce businesses are. For the 12 months ending July 2018, electronic shopping and mail-order houses had an estimated $9.7 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 July 2018, this group had an estimated $7.2 billion in e-commerce sales. With electronic shopping and mail-order houses, there's a grand total of $16.9 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 e-commerce purchases made by foreigners at Canadian businesses.

For electronic shopping and mail-order houses, an estimated 83.2% 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 57.5% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers' share of e-commerce is 42.5%.

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