Retail sales plunge amid pandemic lockdowns

Largest-to-date monthly drop on record

TORONTO 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-fromhome 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 backto-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 year-over-year sales.

But Alimentation CoucheTard Inc., owners of the global Circle K brand, on Friday said the decline in March was a blip.

Corner stores scrambled during the last two weeks of March to adapt to an upside-down world where popping into a store for one item was essentially forbidden. People were also filling up less on gas, and therefore shopping less at stores attached to gas stations.

“People didn’t get out of their home and if they did, it was to make this big stock up at the grocery store,” said Stéphane Trudel, CoucheTard’s senior vice-president of operations for Canada. “So, yeah, we were the only ones open, but the majority of people were at home. So, a big decline in traffic. Sales weren’t as impacted as traffic.”

Couche-Tard changed its assortment in the early weeks of the pandemic in Canada toward larger, takehome products instead of single-serve, ready-to-eat items. For example, customers preferred a big bag of chips to one little bag to eat on the go.

Trudel said Couche-Tard has started to see gains in alcohol and tobacco, particularly because “contraband” cigarettes are now harder to find.

After a “slight” sales decline in March, he said overall sales in Canada grew in April on a year-over-year basis, and are “constantly going up.” But he said it was too early to give exact numbers.

The sector’s steepest drop was in shoe retail, which was down 54 per cent from March 2019, according to the StatCan report, while clothing had a 52.1 per cent decline, and the luxury category of jewelry, luggage and leather was down 47.8 per cent.

But auto sales, by far, contributed the most to the overall decline, down roughly $5 billion compared to February, or 35.6 per cent.