By Ed Strapagiel

After 10 months of 2018, year-to-date total Canadian retail sales are up 3.3%, according to the latest non-adjusted data from Statistics Canada. This is still slowing however, with retail sales gaining just 2.4% year-over-year for the 3 months ending October 2018. At this pace, annual retail sales growth in 2018 is bound to end up as a recent low point, at less than half the 7.1% gain recorded for 2017. There doesn't appear to be anything on the horizon to indicate that things are going to improve soon, although recently rising gasoline prices may provide some false optimism.

As the above chart shows, the 3 month trend (orange line) is still tracking below the underlying 12 month trend (green line), which itself has been on a downward slide through almost all of 2018. Volatile gas prices have tended to distort the retail sales picture in recent years. If gasoline station sales are excluded, 2018 year-to-date retail sales growth would be just 2.3%, a full percentage point less.

The above chart also illustrates how steep the 2018 downturn has been when gas prices are taken out of the picture.

Food & Drug

Retail sales growth in the Food & Drug sector may be turning a corner, or at least levelling out after almost a year of mediocre performance. For the 3 months ending October 2018, retail sales were up 2.6% year-over-year. On the other hand, year-to-date sales are up only 1.3% after 10 months of 2018, so the sector still has a long way to go and is likely to end the year at a 5 year low.

The underlying 12 month trend (green line in the above chart) has declined for most of the year. The 3 month trend (orange line) however has perked up in recent months, indicating a potential although modest recovery going into 2019.

Supermarkets & other grocery stores drive this sector, accounting for about half of its retail sales. For the 3 months ending October 2018, their sales were up 2.6% versus a year ago, their best such gain so far in 2018.

Health & personal care stores are the second largest retailer type in this sector, but their retail sales were up only 0.4% in the 3 months ending October, and are still down 0.1% year-to-date in 2018.

Convenience stores, specialty food stores, and beer, wine & liquor stores continue to enjoy above average retail sales gains, but not enough to move the needle much in the overall scheme of things.

Store Merchandise

After a remarkable run up in 2017, retail sales growth in the Store Merchandise sector has come down just as quickly in 2018. For the 3 months ending October, retail sales were up 2.5% year-over-year, the lowest such result in a year and a half. The 3 month trend continues to track below the underlying 12 month trend, indicating more of the same ahead and going into 2019.

There were some poor performances in terms of retail sales gains for the 3 months ending October 2018. Furniture stores were down 1.8% year-over-year, building material & garden equipment/supplies dealers declined 1.3%, and home furnishings stores gained only 0.4%.

Electronics & appliance stores did relatively well, with retail sales up 5.8% for the 3 month period, but this was markedly less than their 9.4% year-to-date gain.

The mixed bag of miscellaneous store retailers however are having high sales gains, up 9.2% year-to-date. Starting in October 2018, cannabis stores have been added to this group, and their sales were $43 million for the month. They will make a greater impact in the miscellaneous retailers category as time goes on, but will remain only a small part of the overall retail sales picture.

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 on the down slope of a wild ride, with retail sales growth cut in half over the last 12 months. Current trends indicate things are likely to get worse before they get better.

New car dealers' retail sales were up a whopping 9.4% in 2017, but have only gained 0.5% after 10 months of 2018. Rising interest rates are making it more difficult for vehicle manufacturers to offer the most attractive financing packages

Gasoline station retail sales have held up for most of 2018, but even this is softening as pump prices moderate. Due to international economic uncertainty, gasoline prices are likely to remain volatile for some time to come.

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 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 October 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 16.9% year-over-year for the 3 months ending October 2018, but this is less than the 26.5% 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 October 2018, electronic shopping and mail-order houses had an estimated $10.12 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 October 2018, this group had an estimated $7.39 billion in e-commerce sales. With electronic shopping and mail-order houses, there's a grand total of $17.50 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 83.4% 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 57.8% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers' share of e-commerce is 42.2%.

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