Canadian retail growth continues to stumble

Uneven sales across categories have led analyst Ed Strapagiel to predict gloomy results for the rest of 2019.
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While they showed signs of recovery earlier this year, analysis of the latest Statistics Canada figures from retail consultant Ed Strapagiel shows retail sales growth in Canada has continued to stumble as of late.

For the three months ending in July, retail sales gained 0.9% year-over-year, which Strapagiel points out is among the lowest gains in a decade. Looking at the full year, sales are up only 1.8% compared to last year, which were also a low point.

A defining factor of Canadian retail performance is that it has been uneven across categories. While specialty food store sales were up 5.9% and health and personal care up 8.4% in July, grocery store sales grew by only 2.2%, with convenience down by 10.2%. And while health and personal care stores had a good July, sales have grown by only 2.8% for the year-to-date.

The Store Merchandise sector was up 3.3% in July, which was higher than other retail sectors. But respectable performances from department stores (up by 4.6% in July) and furniture (3.5%) were cancelled out by flat or declining sales in many other categories, such as jewelry (down 8.2%), shoes (down 5.2%) and electronics (down 7.1%).

Strapegiel continues to describe the automotive sector as a “roller coaster.” After climbing at the beginning of the year and dipping through the spring, the category grew by 2.5% in July, with 7.3% growth at car dealerships brought down by a 5.9% decline at the gas pumps. Sales growth for the year so far in automotive is flat at 0.7%.

Looking ahead, Strapegiel’s analysis shows that the three-month growth trend has now weakened for three straight months, with the 12-month trend at a new low.

“It’s difficult to see how it might strengthen very much by the end of the year,” he says. “While 2018 was not a good year for Canadian retail, 2019 could be even worse.”

Looking towards e-commerce, online sales represented about 3.2% of total Canadian retail sales for the 12 months ending July 2019. They were up 29.7% year-over-year for the three months ending July 2019, which Strapagiel points out is much higher than for location based retail, which gained just 0.9%.