Retail Council of Canada (RCC) notes with cautious optimism that the May retail numbers reported today by Statistics Canada provide some hope that consumers are returning to retail stores but RCC continues to believe that recovery for most retailers will be very slow throughout the next several months.
The month-over-month increase (May compared to April 2020) of 18.7% illustrates some pent-up demand as consumers returned to stores across the country to shop for a variety of discretionary products. This highlights the role shopping plays in our lives, both culturally and socially, as a way to feel “normal” again.
On the other hand, year-over-year core retail sales decreased (May 2019 versus May 2020) by 5.5% and core retail sales excluding grocery decreased by 12%. Removing grocery, auto and gas from Statistics Canada’s calculation clearly shows that recovery will continue to be slow and unpredictable for many retailers as they adjust to changing consumer habits, new restrictions in stores, and risks of further COVID outbreaks.
Although most retail subsectors were up in May including furniture, clothing, footwear, and sporting goods, they are far from having rebounded to sales levels seen before COVID-19. This suggests that these brick-and-mortar stores are still facing greater challenges, particularly those who rely on sales from tourists or business travel as both are happening at a much lower degree.
As Canadians adjust to their lives in the COVID era with more focus on the home, we expect to see some key subsectors perform better. Based on shopping trend data provided by retailers of all sizes across Canada, we expect this lifestyle trend to continue throughout the summer as the focus moves outdoors (e.g. above ground pools, outdoor furniture, hot tubs, gardening, BBQs, camping).
E-commerce continues to be an important channel for retailers and consumers. Today’s report shows that e-commerce was 8.0% of total retail trade in May. RCC believes that this channel grew at a much greater pace than indicated since major pure-play online sellers such as Amazon are categorized as warehouses and therefore, not included in the calculation. We believe the e-commerce number to be closer to 13% of total retail sales.
Looking ahead, there are several challenges that will continue to test retailers. Back to School is an important consumer spending period that is likely to be impacted by the uncertainty surrounding the status of schools. Many universities have already announced that they will be virtual in the fall and this will undoubtedly have an impact on spending. As well, other upcoming holidays such as Black Friday and Cyber Monday will be impacted by other challenges such as store capacity limitations and delays with home deliveries – both of which will require consumer patience and retailer innovation.
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Michelle Wasylyshen at firstname.lastname@example.org
About Retail Council of Canada
Retail is Canada’s largest employer with 2.1 million Canadians working in our industry. The sector annually generates over $76 billion in wages and employee benefits. Core retail sales (excluding vehicles and gasoline) were $377 billion in 2017. Retail Council of Canada (RCC) members represent more than two thirds of retail sales in the country. RCC is a not-for-profit, industry-funded association that represents small, medium and large retail businesses in every community across the country. As the Voice of Retail™ in Canada, we proudly represent more than 45,000 storefronts in all retail formats, including department, grocery, specialty, discount, independent retailers and online merchants. www.RetailCouncil.org