*MONTREAL EATON CENTRE PHOTO: IVANHOÉ CAMBRIDGE*

The following is an analysis by Toronto-based retail consultant Ed Strapagiel, who publishes a monthly report with his perspective on the state of the Canadian retail industry.

By Ed Strapagiel

There was an uptick in Canadian retail sales growth in April 2019, according to the latest unadjusted numbers from Statistics Canada. For the 3 months ending April 2019, sales were up 2.8% year-over-year. Although hardly spectacular, this was the highest such gain in 6 months. More importantly, things now appear to be heading in the right direction, and retail sales in all major retail sectors are showing the same kind of rebound.

The 3 month trend (orange line in the chart above) continues to strengthen, although it has a way to go to return to its previous highs. The underlying 12 month trend (green line) is also showing a slight improvement, for the first time in over 12 months.

While the patient seems to be recovering, we're not out of the woods yet. There was a similar upswing in retail sales growth in mid 2018 that never stuck.

Food & Drug

Retail sales in the Food & Drug sector were up 3.6% year-over-year for the 3 months ending April 2019. This beat the overall retail average, and in fact Food & Drug has been turning in good sales growth for about the last 8 months. The underlying 12 month trend (green line in the above chart) has been slowly improving since then, after having weakened for almost 2 years prior to that.

Supermarkets & other grocery stores led the way in this sector. Their sales increased 4.3% year-over-year for the 3 months ending April 2019, much higher than the mere 0.6% gain recorded for the same period in 2018.

Retail sales at health & personal care stores gained 3.1% for the 3 months ending April 2019. This is about in line with historical performance and represents some recovery over very modest sales gains a year ago.

Convenience stores and specialty food stores, after being high flyers last year, have now come back down to earth. For both, retail sales were up just 1.2% for the 3 months ending April 2019.

Store Merchandise

The Store Merchandise sector's retail sales gained 2.9% year-over-year for the 3 months ending April 2019. While not exactly setting the house on fire, sales do appear to be steadily improving after last year's dismal performance.

The 3 month trend (orange line in the chart) has now just nudged ahead of the underlying 12 month trend (green line) for the first time in over a year. While this is promising, these trends were so low that they almost had no choice but to come back up.

For the 3 months ending April 2019, miscellaneous store retailers reported the highest gain at up 9.3% year-over-year, in large part due to the addition of new cannabis stores. Jewellery, luggage and leather goods stores also had a large sales increase at 7.5%. The large general merchandise sector also did well, with retail sales rising 5.5% during the period, their best 3 month gain in over a year. Furniture stores were up 2.6%, a marked improvement over slow to no retail sales increases in 2018.

Electronics & appliance stores continued to be the poorest performers, with retail sales down 8.8% year-over-year for the 3 months ending April 2019. Sporting goods, hobby, book & music stores and shoe stores were also down, by 1.3% and 1.2% respectively. .

Note that Statistics Canada is now suppressing the breakdown of general merchandise stores for confidentiality reasons. The figures in the "By The Numbers" table below are estimates based on previous trends.

Automotive & Related

The Automotive & Related sector appears to be getting up from the canvas after having been beaten down for over a year. Total sector retail sales were up a modest 2.2% year-over-year for the 3 months ending April 2019, but this represents a good move out of the negative territory at the start of the year.

New car dealers' retail sales were up 3.5% for the 3 month period, a solid improvement over the 1.2% decline in the last quarter of 2018. Although it's a much smaller group, used car dealers did very well, with a 12.5% retail sales gain for the 3 months ending April 2019. Automotive parts, accessories & tire stores also recorded an above average increase of 7.1%.

The Automotive & Related sector, and overall Canadian retail sales for that matter, is still being suppressed by slow sales at gasoline stations. Their retail sales were down 2.9% year-over-year for the 3 months ending April 2019. This of course is all due to lower gas pump prices ... and motorists don't mind it at all.

By The Numbers

Special Note: Statistics Canada revised historical data with the February 2019 release. Unadjusted monthly data were revised back to January 2018, while seasonally adjusted data were revised back to January 2015. Those keeping score should update their files. The analysis in this report is always based on unadjusted data.

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 3.1% of total Canadian retail sales for the 3 months ending April 2019, 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 18.0% year-over-year for the 3 months ending April 2019. This was significantly higher than for location based retail which gained 2.8%.

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 April 2019, electronic shopping and mail-order houses had an estimated $11.4 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 April 2019, this group had an estimated $7.6 billion in e-commerce sales. With electronic shopping and mail-order houses, there's a grand total of $19.0 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 85.4% 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 60.0% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers' share of e-commerce is 40.0%.

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