Food sales are cooling, but other stores are rebounding

While some retail trends are finally beginning to reverse, it could be due to comparisons to the outset of the COVID-19 pandemic.
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The high highs that some parts of the Canadian retail sector faced last year appear to be leveling off, while the ones that faced low lows seem to be recovering, according to the analysis of Stats Canada’s latest retail sales numbers by Ed Strapagiel.

The retail analyst points out, however, that this growth may be benefiting from a year-over-year comparison to when retailers first began to see the impact of the COVID-19 pandemic on their sales, good or bad. And since the biggest impacts of the pandemic were felt in Q2 of last year, there may be more impressive-seeming gains to come.

While sales growth in food and drug continues to be respectable – up by 4.8% year-over-year in Q1 – it is cooling off significantly from the highs it reached in Q4 of 2020. However, looking at March alone, sales in the sector were down 5.1% year-over-year, with a 12.3% drop at grocery stores. The comparison to 2020 may be at play again here, as the second half of March 2020 was when many Canadians increased their food purchase and stockpiled on certain items.

Meanwhile, the beleaguered store merchandise sector bounced back significantly in Q1, with numerous categories posting significant year-over-year sales increases, including building and garden (35.6%), electronics and appliance (22.6%), furniture (18.7%) and general merchandise (10.6%) stores.

Even though fashion and clothing store sales still dipped by 7.8% in Q1, Strapagiel points out that’s significantly better than the 26.7% decline the category had in 2020. Clothing sales were also boosted by a staggering 92.3% in March 2021 alone, though that again may be due to comparisons to the previous year, when stores in the category first had to shut their doors due to pandemic safety measures.

The three- and 12-month growth trends in store merchandise are both continuing to point upward, which suggests strong performance going forward, but given that the sector faced some of its heaviest declines from March to July last year, results may be benefiting from a weak baseline comparison for at least a few more months.

A similar story is also playing out in the automotive sector. In Q1 2021, retail sales grew by 12.4% year-over-year, with new car dealers up 17.7%, significantly better than the 12.5% dip the category experienced for all of 2020. The three- and 12-month trends lines are also both pointing upwards again (though the 12-month trend is still in negative territory), which again may be benefiting (and continue to benefit) from the shutdowns that began in March of 2020.

Ecommerce sales are continuing to boom, up 87.6% year-over-year in Q1, though that’s beginning to level out after more than a year of regular increases. Online sales represented 6.7% of total Canadian retail sales over the last 12 months.