By Ed Strapagiel

The latest data from Statistics Canada show that total Canadian non-adjusted retail sales for 2018 were up just 3.0% after 11 months of the year. For the 3 months ending November 2018, retail sales gained only 1.4% year-over-year, which is less than inflation. With only one month of data to report, it seems certain 2018 will end up as one of the worst years on record for Canadian retail sales. Growth for the year is likely to end up at around 2.9%, much less than the 7.1% gain made in 2017.

The trend lines are still softening going into 2019. As the above chart shows, the underlying 12 month trend (green line) has been heading steadily downward almost all year, while the shorter term 3 month trend (orange line) is even worse. Rising gasoline prices may move up the statistics in early 2019, but this doesn't really do retail much good.

Food & Drug

Retail sales growth in the Food & Drug sector has been slowly declining since late 2017, but this seems to have steadied off in recent months. Nevertheless, 2018 will go down as a particularly slow year – after 11 months, year-to-date retail sales are up just 1.5%. For the 3 months ending November 2018 however, the year-over-year gain was 2.3%. Although hardly stellar, this still indicates slightly improving performance, or at least things aren't getting any worse.

The underlying 12 month trend (green line in the above chart) has now gone from declining to flat, albeit at a modest level. The 3 month trend (orange line) is tracking ahead for the first time in over a year, so there may be some hope for stronger retail sales growth for the Food & Drug sector in 2019.

Retail sales at supermarkets & other grocery stores drive this sector, and their retail sales may be bouncing back. For the 3 months ending November 2018, their sales were up 2.7% versus a year ago, their best 3 month performance so far in 2018.

On the other hand, health & personal care stores, the second largest retailer type in this sector, continue to languish. Their retail sales declined 0.3% year-over-year for the 3 months ending November 2018, and are down 0.2% year-to-date after 11 months of the year.

Convenience stores and specialty food stores are enjoying significantly higher retail sales gains, but these segments are too small to have a major impact on the Food & Drug sector overall.

Store Merchandise

After rising to a 5-year high in 2017, annual retail sales growth in the Store Merchandise sector is now on track to hit a 5-year low in 2018. Retail sales were up just 1.4% year-over-year for the 3 months ending November, another 5-year low. The underlying 12 month trend (green line in the chart) just keeps weakening. Things may turn around sometime in 2019, but it's impossible to say when.

A number of store types are not doing well. For the 3 months ending November 2018, furniture stores' retail sales were down 3.2% year-over-year, building material & garden equipment/supplies dealers declined 2.7%, sporting goods, hobby, book and music stores were off 2.4%, and home furnishings stores lost 1.3%.

The ranks of better performers are much thinner. Clothing stores were up 3.9% year-over-year for the 3 months ending November 2018, and jewellery, luggage & leather goods stores gained 3.2%.

The biggest gain however was by miscellaneous store retailers, up 10.1%. This was pushed along by the recent addition of cannabis stores to this group. Cannabis stores' retail sales were $54.4 million in November 2018, but could have been higher if not for supply restrictions.

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

Retail sales in the Automotive & Related sector are practically in free fall. The underlying 12 month trend (green line in the chart) has weakened significantly since a year ago, and now looks much like the collapse that occurred in 2015. The 3 month trend (orange line) is tracking downward, indicating that things are still going to get worse before they get better.

New car dealers' retail sales were actually down 1.0% year-over-year for the 3 months ending November 2018, and up only 0.5% on a year-to-date basis. The much smaller used car dealers segment is in better shape, with year-to-date retail sales up 6.7%. Sales at automotive parts, accessories and tire stores lead the sector however, with sales increasing 8.2% year-to-date.

Swings in gasoline prices appear to be responsible for the volatility of the sector as shown by the 3 month trend. Gas station sales account for most of the bump in growth in mid 2018, but also for most of the decline since then.

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 2.9% of total Canadian retail sales for the 12 months ending November 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 18.6% year-over-year for the 3 months ending November 2018, but this is less than the 26.2% 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 November 2018, electronic shopping and mail-order houses had an estimated $10.4 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 November 2018, this group had an estimated $7.5 billion in e-commerce sales. With electronic shopping and mail-order houses, there's a grand total of $17.9 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 83.4% 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 are attributable to 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 57.9% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers' share of e-commerce is 42.1%.

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