National Post (National Edition)
Retail got November boost, lockdowns bit in December
TORONTO • Canadian retailers sold more than expected in November, buoyed by an early wave of holiday shopping before heavier pandemic restrictions took hold, according to the latest monthly report from Statistics Canada.
Sector-wide sales rose at their fastest pace since September, growing 1.3 per cent over the previous month for a total of $55.2 billion, StatCan said in the report, released on Friday. Excluding gas stations and auto sales, growth was even higher, at 2.6 per cent.
But the sales growth wasn't spread evenly, continuing the pandemic trend that has disrupted lifestyles and, in doing so, redirected billions of dollars in sales away from some categories and into others.
Clothing stores and gas stations, for example, suffered double-digit sales declines in November compared to the previous year. Shoe retail was hit hardest, year over year, down 19.5 per cent. Meanwhile, sporting goods, home improvement, furniture and food sales saw double-digit growth.
“At the high level it looks good, but one level down it is not good,” said Michael LeBlanc, senior retail adviser at the Retail Council of Canada.
“One level down, when you look at the numbers in November, you see (the growth) is really driven by a couple of essential categories.”
Grocery sales were up 13 per cent as compared to last year — part of the ongoing knock-on effect from the near-total shutdown of restaurants. Sporting goods, music and book stores saw sales growth of more than 27 per cent, spurred on by a growing interest in outdoor activities.
Sales in building equipment shot up by 28 per cent, year over year, while furniture sales rose by 23.7 per cent. That's simply because people are at home more, LeBlanc said.
Clothing and accessories, on the other hand, dropped by 13.9 per cent year-overyear, while gas station sales were down by more than 18 per cent.
LeBlanc said the drop in fashion sales was partly because this November's social calendar didn't have the same lineup of office parties and holiday drop-ins. Without them, retailers didn't see an uptick in customers looking to buy new outfits and accessories.
In what has been a persistent bright spot for retail throughout the pandemic, e-commerce sales continued to soar, up by more than 75 per cent compared to last November. But they have not been enough to overcome regional restrictions that forced stores to close in most of Canada's largest markets.
“You just can't make that up,” LeBlanc said.
Retail sales are expected to have only gotten worse since, as stay-at-home orders started to come into effect in late November and persisted into December, tamping down the usual Christmas shopping rush and the critical Boxing Day sales push. StatCan's preliminary estimate was that December sales fell by 2.6 per cent.
“And with lockdowns intensifying in parts of the country, we expect sales will dip again in January,” RBC economists Nathan Janzen and Claire Fan wrote in a research note on Friday. They said RBC's credit and debit card spending data point to “sales falling about five per cent in December.” But they also stressed that the drop was much less acute “than in the spring when retail sales plunged over 30 per cent over March and April.”
TD economist Ksenia Bushmeneva gave some reason for the sector to hope, noting that winter lockdowns will lead to less spending and higher savings, creating pent-up demand that will be unleashed on the market in the second half of 2021.
“Spending is expected to rebound as restrictions are lifted and vaccines become widely available,” Bushmeneva wrote in a research note Friday.
LeBlanc at the Retail Council said that would be especially good news for struggling clothing stores.
“There's a school of thought that people are going to be so fed up of wearing what we wear today, that you're going to see a big acceleration in the opposite direction,” he said. “You know, people are going to want to dress up. I mean, I will.”