By Ed Strapagiel

Updated Statistics Canada data show that unadjusted retail sales declined 0.7% year-over-year in Q1 2020. But that's not the real story. Only about the second half of March was impacted by the COVID-19 shutdown, and for March alone the decline in Canadian retail sales was a whopping 10.9%. This is the sort of result, or worse, that we can expect in the April numbers when they are released.

Various retail sectors have been affected very differently. Food & Drug stores and E-Commerce have spiked up, while Store Merchandise and Automotive & Related have spiked down. The circumstances in Canadian retail however are so unprecedented that it makes little sense to consider trends. Things will likely return somewhat closer to normal at some point, but it'll likely be a new normal that we haven't seen before.

Food & Drug

Retail sales in the Food & Drug sector were up 8.8% year-over-year for Q1 2020, and a nosebleed plus 14.6% in March alone. As the above chart shows, there was a sharp spike in the 3 month short term trend (orange line in the chart), and the underlying 12 month trend (green line) has taken a distinct upward turn. These are anomalies however, and should cool off by midyear.

Supermarkets & other grocery stores led the charge, with retail sales increasing 22.1% year-over-year in March, and gaining a record 12.6% for Q1 2020 overall. This was a combined effect of consumer hoarding and of many other retailers temporarily closing their doors.

Health and personal care stores' retail sales were up 5.5% in March. This was not nearly as robust as the gain for supermarkets but still well above the overall retail average.

Store Merchandise

Retail sales in the Store Merchandise sector took a sharp downturn, declining 10.4% year-over-year in March and 0.7% for Q1 2020 overall. Store and mall shutdowns only began in mid March however, so that the numbers for April are likely to be significantly worse.

Clothing and clothing accessories stores were hit especially hard. Their sales were down a colossal 54.1% in March versus last year, and were down 19.0% for Q1 2020. Many of these retailers are located in and are dependent on shopping malls which shut down. Furniture and home furnishings stores also had a terrible March with retail sales down 26.2%, likely due to consumers avoiding major purchases.

The one bright spot in this sector however was general merchandise retailers, whose retail sales gained a respectable 6.2% for both March and Q1. This group includes combination stores like Costco and Walmart which also serve as supermarkets, and/or tend to be larger retailers with better developed e-commerce capabilities to shore up their retail sales.

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 looks like it has just driven off a cliff. Retail sales were down 8.5% for Q1 overall, and off a huge 30.2% in March alone.

New car dealers saw their sales decline 35.0% in March due to closed dealerships and people reluctant to take on financial risk in times of economic uncertainty. Again, the numbers for April stand to be even worse.

Gasoline station retail sales were on a modest rise at the start if the year, but have since gone downhill, as pump prices have declined and people are staying home and driving less. In March, gas station sales were down 23.3% year-over-year.

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

Just as there were major changes in location-based retail sales, StatsCan data shows an upswing in e-commerce.

Overall, e-commerce represented about 3.7% of Canadian retail sales for the 12 months ending March 2020, including both pure play sellers as well as the online operations of brick & mortar stores. In March 2020 alone however, e-commerce's share of total was up to 4.9%. Note that Canadian consumers may also buy online from foreign websites which is not captured in these numbers.

Canadian e-commerce sales were up 23.8% year-over-year in Q1 2020. This was far better than for location based retail which lost 0.7%. In March 2020 alone, e-commerce sales gained a huge 40.4% over a year ago. Year-over-year growth of e-commerce sales is expected to increase in the next few months as consumers become more accustomed to shopping online.

Note that location based retail is the same as that in the preceding "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 March 2020, electronic shopping and mail-order houses had an estimated $15.1 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 2020, this group had an estimated $8.1 billion in e-commerce sales. With electronic shopping and mail-order houses, there's a grand total of $23.3 billion in e-commerce sales by Canadian operators. 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 operations.

For electronic shopping and mail-order houses, an estimated 85.8% of their sales are allocated to e-commerce. For (mostly) bricks & mortar retailers, it can be estimated that just 1.3% 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 65.1% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers' share of e-commerce was 34.9%.

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