Retail sales climbed more than expected in September to mark the fifth consecutive monthly increase since the record drop in April due to the pandemic, but economists warned that rising COVID-19 cases and looming restrictions could mean weakness ahead. On November 20 Statistics Canada reported that retail sales rose 1.1% to $53.9 billion in September, topping the 0.2% increase that economists on average had been expecting, according to financial data firm Refinitiv.

“Today’s release was a nice surprise, but with COVID-19 situation deteriorating rapidly across much of the country since September, further good news will likely be on hold for now,” TD Bank economist Ksenia Bushmeneva wrote in a report. “I think a repeat of [September’s] performance is unlikely,” she said. She pointed to high-frequency data showing foot traffic at retail outlets on the decline and Canadians scaling back on purchases. The report from November 20 “might be the end of the good news, at least for now.”

Statistics Canada said its early estimate for October suggests retail sales for the month were relatively unchanged, but noted it was a preliminary figure and would be revised. “Given the increasing COVID-driven regional restrictions in recent weeks, November and December could see some weakness,” wrote Benjamin Reitzes, director, Canadian rates and macro strategist at the Bank of Montreal.

Statistics Canada said retail sales were up in nine of the 11 subsectors in September with core retail sales — which excludes gasoline stations and motor vehicle and parts dealers — rose 1.1%. Sales at general merchandise stores climbed 1.8%, while sales at food and beverage stores rose 0.9%, partially due to higher prices for meat, fish and dairy products. Retail sales at furniture and home furnishings stores added 4.5%. Sales at motor vehicle and parts dealers rose 1.5% in September, while sales at gasoline stations increased 0.2%. In volume terms, retail sales were up 1.1% in September.

Online Sales

On November 23, Statistics Canada said that online sales are set to hit a record this year in Canada, amid limits on in-person shopping during the COVID-19 pandemic.The new data is in line with Statistics Canada’s estimates from the spring, when retail e-commerce sales more than doubled from February to May. Statistics Canada says that 2020 is on pace to beat 2019’s total e-commerce sales of $305 billion, a figure that has more than doubled since 2013 and includes business-to-business sales as well as retail purchases.

A separate online survey of 600 adults from Google Canada in late October also suggested that 70% of respondents were looking online, not in-store, for holiday gifts. (The polling industry’s professional body, the Marketing Research and Intelligence Association, says online surveys cannot be assigned a margin of error because they do not randomly sample the population.)

The data comes as Canada’s biggest city, Toronto, and neighbouring Peel Region entered a lockdown ahead of the key holiday shopping season, limiting non-essential retailers to curbside pickup an online sales. Only essential businesses, such as grocers and pharmacies, are open to in-person shopping for the next 28 days, and store capacity is limited to 50%. Other municipalities across Canada are also tightening restrictions amid rising COVID-19 case counts.

Up until last year, online sales represented about 8% of revenue for Canadian businesses with five or more employees, Statistics Canada said in the report. As of 2019, 39% of large businesses had online sales in Canada, compared with 23% of small businesses, the report said.

While one in four Canadian businesses had some online sales in 2019, Statistics Canada said goods sold in retail stores were often bought in bulk online from higher in the supply chain, meaning that the majority of online sales across the country were business-to-business.

Source: Toronto Star
Source: Globe and Mail
Source: Toronto Star