Canadian retail sales growth lowest since recession

Ed Strapagiel's latest analysis shows every sector contributed to a "funk" that isn't set to let up soon.

Anyone holding out hope that Canadian retail sales growth would turn itself around in December will be disappointed.

The latest analysis of Statistics Canada data from consultant Ed Strapagiel shows that retail sales in Canada grew by 1.6% in 2019, the lowest growth rate since 2009, when sales declined by 2.9%, with a particularly weak Q4 at 1.4% growth. With both the 3- and 12-month trends looking weak, it may mean relief may not come in the early months of 2020.

According to Strapagiel’s analysis, all major retail sectors have contributed to the “funk” in some way.

Retail sales growth in the Food and Drug sector was 2.0% year-over-year in 2019, also a ten-year low. While supermarkets and grocery stores grew by 3.4% in Q4, it was offset by declines at convenience stores and flat sales at specialty food stores. Health and personal care stores also had a tough Q4, with retail sales declining 1.2% year-over-year, and up only 1.5% for 2019 as a whole. While the three-month trend is heading upwards, the fact that it is still trending below the 12-month trend, suggesting relief in the sector may be some time off.

The Store Merchandise sector has modest 2.2% growth in 2019 and 1.8% Q4 2019 alone, though Strapagiel says this is something of a positive, as it is a reversal of a significant slide in the sector in 2018. Sales at electronics, sporting goods, hobby, book and shoe stores were still hit hard in 2019, though the addition of cannabis stores helped the “miscellaneous” category gain 11.0% compared to the previous year’s base. General merchandise and furniture stores also had a good year, relative to the rest of the sector, with retail sales up 3.9% and 3.7%, respectively.

Once a major driver of retail growth in Canada, the Automotive sector has continued to struggle, with an annual sales growth of only 0.7% and current trends pointing to a weak start going into 2020. Used car dealers had an annual retail sales gain of 6.5%., but new car dealers, which account for over half of the sector’s retail sales, were up only 2.3% for the year. Gasoline stations continue to be the biggest drag on overall Canadian retail numbers, with a sales decline of 3.6% for the year – Strapagiel points out that, if gas stations were excluded, total Canadian retail sales growth would have been up 2.2% in 2019, instead of 1.6%.

E-commerce, however, continues to surge in Canada: while it represented about 3.5% of Canadian retailers’ sales in 2019, with year-over-year growth was 17.3% in Q4.