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. This report pertains to the first quarter of 2019.

By Ed Strapagiel

The latest data from Statistics Canada for March 2019 show low retail sales growth, but also modest improvement over even lower growth of prior months. Total Canadian retail sales were up 1.7% year-over-year in Q1 2019 on a not seasonally adjusted basis. While this was the weakest first quarter in 4 years, it still edged ahead of Q4 2018 when growth was a mere 1.3%. But even if things are looking up, there's still a long way to go.

Per the above chart, the 3 month trend (orange line) is at a low point, which in turn is driving down the underlying 12 month trend (green line). And things are still getting softer. Total retail sales increased only 0.4% year-over-year for the 3 months ending January 2019, the weakest consecutive 3 month performance in 6 years.

Food and Drug

Food & Drug appears to be the best performer of the major retail sectors, which is not often the case. In Q1 2019, retail sales gained 3.3% year-over-year, almost double that of overall total retail. The 3 month trend (orange line in the chart above) is running still slightly ahead of the underlying 12 month trend (green line).

Supermarkets & other grocery stores had a good Q1 2019, with retail sales increasing 4.6% year over-year. This represents a notable improvement compared to a 2.4% gain for all of 2018.

Health & personal care stores are the next largest piece of the Food & Drug sector, and their retail sales gained a more modest 2.2% in Q1 2019. While not a big increase, this was about on par with their average performance of the past 12 months.

After above average sales gains in previous months, convenience stores and specialty food stores seem to have hit a speed bump and have now cooled off. This might only be a temporary setback ... or not.

Store Merchandise

Retail sales in the Store Merchandise sector were up 2.1% year-over-year in Q1 2019. This is relatively weak by historical standards, but also a considerable improvement over the mere 1.0% gain recorded for the preceding quarter, Q4 2018.

The 3 month trend (orange line in the chart) appears to be starting a comeback after a near-death experience. The underlying 12 month trend (green line) is still weak however, and is at the lowest point that it's been in since at least 2013.

A number of retailer segments had a poor Q1 2019, including electronics & appliance stores (retail sales down 6.5% year-over-year), sporting goods, hobby, book & music stores (down 2.2%), and home furnishings stores (down 0.4%). Retail sales at shoe stores were up, but only by a scant 0.3%.

On the other side of the ledger in Store Merchandise, there were few strong gains in Q1 2019. Sales at miscellaneous store retailers were up 8.5% year-over-year, but this was mostly because of the addition of the new cannabis stores segment. The next best performance was at clothing stores, with retail sales up 4.4% in Q1 2019.

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

Automotive & Related had a rough year in 2018 and much of this has continued into 2019. Total sector retail sales barely squeaked out an increase in Q1 2019, rising by a mere 0.2% year-over-year. But even this was better than the 0.2% sales decline suffered in Q4 2018.

Retail sales at new car dealers however are showing some signs of life. In Q1 2019, their sales were up 2.4% year-over-year, after having declined 0.6% for the year 2018. The much smaller used car dealers segment had the highest gain in the sector, with retail sales up 11.5% in the first quarter.

Gasoline station retail sales are still holding back the Automotive & Related sector, and indeed Canadian retail overall. Sales were down 6.5% in Q1 2019 due to lower pump prices.

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.

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.

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Overall, e-commerce represented about 3.3% of total Canadian retail sales in Q1 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 19.3% year-over-year in the first quarter of 2019. This was significantly higher than for location based retail which gained 1.7%.

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 March 2019, electronic shopping and mail-order houses had an estimated $11.2 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 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 $18.8 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 85.3% 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 59.5% of all e-commerce sales in Canada, while (mostly) bricks & mortar location-based retailers' share of e-commerce is 40.5%.

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