Retail sales are up compared to pre-pandemic days

Women clothes in fashion store. Shopping mall. Women fashion shopping concept.

Canadians’ spending appetite is strong, but being increasingly affected by inflation.

While that finding from Mastercard’s latest SpendingPulse survey might not surprise anyone, the degree to which growth has slowed down might be bracing for some retailers.

The Pulse, which measures instore and online retail sales growth across all payment modalities, reveals that excluding car sales, Canadian spending increased 15.4% in July compared with pre-pandemic levels. Online spending compared to pre-pandemic saw a significant surge (up 74.7% versus 2019), while in-store sales also increased (+7.7% compared with pre-pandemic levels).

However, compared with the July 2021 period, total retail sales (minus automotive) is up a modest 1%. Ecommerce sales continue to climb, up 5.4% from July 2021 levels, but considerably slower than the pre-pandemic levels, with summer sales and promotions enticing consumers online.

“While we’re seeing a slight acceleration in consumer spending, the latest retail trends clearly demonstrate the impact of decades-high inflation on consumer spending,” said Steve Sadove, senior advisor for Mastercard.

According to Sadove, as retailers cope with supply chain and inventory issues, promotional activity will continue to be an important strategy, especially in the face of shifting consumer priorities and price spikes.

While decades-high inflation continues to weigh strongly on the market, summer vacations and elevated gas prices fueled Fuel & Convenience spending rose, which spiked 28% compared with 2021 and is up 40.4% compared with 2019.

Also, the apparel sector bucked the decreasing sales growth trend and saw sales up 17.1% year over year. Apparel could see continued momentum going into the fall, with the category a top spend driver for back to school.

The apparel category even surpassed sales growth versus 2019, along with restaurants, which is up 4.3% compared with July 2021 levels. Electronics, however, are stagnating, with sales up only 0.7% compared to 2021, slowed down from a big 14.4% increased compared to 2019.