Lockdowns precipitate historic drop in retail sales
The desperate situation for Canadian retailers came into clearer focus on Friday as Statistics Canada released a report showing record-breaking declines of billions of dollars in sector-wide sales during the early days of the coronavirus pandemic.
The sales data from March captures the first weeks of the panic, as work-from-home orders swept the country and non-essential businesses were shuttered en masse halfway through the month. Despite surges of panic buying, the closure of non-essential businesses crushed retail sales, which fell 10 per cent to $47 billion in March, from $51 billion in February — the largest-todate monthly drop on record, Statcan said.
Although 40 per cent of retailers were closed for some part of March, it was only for an average of five days. Not surprisingly, sales dropped further through April, the first full month of the economic shutdown in Canada. An advance estimate from Statistics Canada expects a 15.6-per-cent sales drop in April compared to March, though the agency suggested that figure could change.
“It goes without saying that either figure — the one for March or the one for April — would be record-breaking, but that back-to-back declines of this magnitude take us into fully uncharted waters,” Derek Holt, Scotiabank’s head capital markets economics, said in note to clients on Friday.
Holt said Canadian retail was already in a bad place before the pandemic “blew the barn doors off,” noting the sector’s sales volumes haven’t grown since the third quarter of 2018.
“COVID-19 made a bad situation exponentially worse,” he said.
But it was clear from the Statcan data on Friday that there was an obvious divide between the winners and losers of this retail reckoning, with essential businesses on one side and non-essential ones on the other.
The hardest-hit retailers — those selling clothing, shoes and luxury items such as jewellers — lost half their sales or more in March compared to a year earlier. And the best-off industries — grocery, beer and liquor — had year-over-year sales increases of between 20 and 30 per cent.
The one outlier was convenience stores, an essential business that had a relatively ho-hum month, with a 0.6-per-cent decline in yearover-year sales.