Impact of COVID-19 on the Canadian Hardware & Housewares Market

After declining for the months of March, April and May, retail sales from Statistics Canada (unadjusted for seasonality) finally rose 4.8% in June year-over-year to $56.9 billion.  

Meanwhile, during those three months from March through May, retail sales for the Hardware sector were down only 0.1% while in the Housewares sector, they were actually up 8.7%.

Of course, within those sectors, retail sales varied quite a bit depending on the product category.  For example, raw retail sales data for power tools, paint, paint supplies & wallpaper, and home & garden supplies saw healthy increases while categories like plumbing & electrical supplies and floor coverings showed significant declines.  On the Housewares side, outdoor home furniture was up a staggering 51.3% year-over-year during those 3 months while small appliances saw an increase of 22.8%.  On the flipside, the category of tableware, kitchenware, cookware & bakeware was down 10.5% during this period.  

An important trend that we saw as the pandemic started was the rise in online sales.  Statistics Canada reported a monthly increase in e-commerce sales in April of 99% while in-store sales dropped 25.3%.  For general merchandise stores the increase was even higher to 170% (in-store down 15%) while the building material and garden equipment and supplies dealers sector saw an increase of 41% with in-store sales declining 16%.  

It is important to understand though what is not included in Statistics Canada’s tracking of e-commerce sales specifically that cross border and sales by non-Canadian retailers; sales by wholesalers & commercial distributors to end-users; and non-Canadian sales on 3rd party websites (Amazon) are not included.  

So looking ahead, even though retail sales overall have been improving (see latest news for July below) and many companies within the hardware & housewares industry have faired pretty well sales-wise so far during the pandemic, we are not out of the woods yet especially with concerns of a second wave this fall and winter.  Many economists and organizations like the OECD do not see GDP levels returning to pre-pandemic levels until the third quarter of 2021.  Trying to forecast sales for 2021 after a year like 2020 is going to be extremely difficult.

The info and charts in this article was pulled together by our CHHMA analyst Bob Smith,  If you would be interested in discussing this data further with him or would be interested in customized market reports for your company, please send Bob an email.

Canadian Retail Sales Rise 0.6% in July

ON September 18th Statistics Canada reported that seasonally adjusted retail sales rose 0.6% to $52.9 billion in July, led by higher sales at motor vehicle and parts dealers and gasoline stations.

Core retail sales, which exclude these two subsectors, declined 1.2% on lower sales at building material and garden equipment and supplies dealers as well as at food and beverage stores.

Overall, the recovery in total retail sales has been V-shaped, with sales in June and July, respectively, rebounding from the record low observed in April. As noted in the National balance sheet and financial flow accounts, second quarter 2020, the period of depressed retail sales in the second quarter of 2020 coincided with a 13.7% decline in household spending (nominal terms) and an increase in the household savings rate to 28.2% as physical distancing measures left Canadians with fewer places to spend. However, with the gradual resumption of business activities across the country, retail sales in June and July, respectively, were able to recover and surpass February’s pre-pandemic levels.

Retail sales in volume terms were up 0.4% in July.

Sales were up in 6 of 11 subsectors in July, accounting for 48.6% of total retail sales. The motor vehicle and parts dealers subsector (+3.3%) contributed the most to the sales increase in July, on continued pent-up demand for motor vehicles following pandemic-driven dealership closures in the spring.

Sales at gasoline stations increased 6.1%, while the volume of gasoline sold rose 5.5%. The sales gain was attributable to higher gasoline prices and the continued reopening of the economy, as well as more Canadians travelling and buying locally.

Following four increases in five months, sales at core retailers decreased 1.2% in July, led by sharply lower sales at building material and garden equipment and supplies dealers (-11.6%).

Sales at food and beverage stores declined 2.1% in July, the third monthly decrease following the stockpile-driven record high in March. Although food and beverage store sales remain above pre-pandemic levels, sales in July fell to their lowest level in four months.

General merchandise (-0.4%) and sporting goods, hobby, book, and music (-8.8%) store sales declined for the first time in three months.

Conversely, sales at clothing and clothing accessories stores rose for the third consecutive month, up 11.2% in July, as more regions allowed shopping malls to re-open. Nevertheless, sales at clothing and clothing accessories stores were 13.6% below February levels.

On an unadjusted basis, retail e-commerce sales were $2.8 billion in July, accounting for 4.8% of total retail trade. As more retailers have expanded in-person shopping in accordance with public health measures, the share of retail e-commerce sales to total retail sales has declined, following the record high for retail e-commerce sales set in April. Nevertheless, retail e-commerce sales as a share of total retail sales were 1.7 percentage points above July 2019 levels.

On a year-over-year basis, retail e-commerce increased 63.2%, while total unadjusted retail sales increased 5.6%.

When adjusted for basic seasonal effects, retail e-commerce decreased 8.1% in July.

Source: Statistics Canada