Retail sales continue ‘stumbling along’

The latest analysis by Ed Strapagiel finds modest sales growth heading into the busy holiday season.

Canadian retail sales are “stumbling along at a modest pace,” according to the latest Statistics Canada data examined by retail analyst Ed Strapagiel.

For the three months ending in August, non-adjusted sales were up 3.7%, representing around half the 7.1% gains recorded over the course of 2017. Overall, sales have been on a consistent fall since the beginning of the year, with the 3-month growth trend falling below the 12-month trend, and the holiday “doesn’t look too promising at this stage,” writes Strapagiel.

What’s more, the prices of gasoline are “masking” the declines being felt across retail as a whole. For example, the retail analyst notes that retail sales were up 3.6% for the first eight months of the year, but only when gas stations were included. Otherwise, those numbers fell to 2.6% for the same period. He estimates that rising gas prices have added a full percentage point to the retail sales outlook.

Mediocre sales growth is being seen across food and drugs and store merchandise. On the food and drugs side, sales are up 1.2% for the first eight months of the year.  Around 75% of sales in the sector have come from supermarkets and other grocery stores, down 0.3% after eight months, and from health & personal care stores, down 0.1% overall. Meanwhile, specialty food stores, convenience stores, and beer, wine & liquor stores did comparatively better, coming in at 5% or more for the same period.

Sales in store merchandise were higher, with an increase of 4.3% for the same period ended in August. Results have been comparatively smaller than last year’s 6.5% growth for the entirety of 2017. But current growth rates are roughly in line with those of other years.

Electronics and appliance stores continue to do well, with retail sales up 10.8% after the first eight months. Other stores, labelled “miscellaneous store retailers,” also recorded an uptick of 9.1% year-to-date, and clothing stores gained 5.5%. Meanwhile, sales were down 1.2% and up only 0.3% in shoe stores and sporting goods, hobby, book & music stores, respectively.

The major gains have come at the gas pumps. Year-to-date sales are up 16.8%, due to higher prices, not higher demand. “Gasoline prices are now stabilizing however, and retail sales gains are likely to flatten out,” writes Strapagiel. “This in turn will bring down overall total retail performance statistics.”