Lockdown sent shoppers online in droves: report

Canadian consumers flocked online to shop as the measures to combat the COVID-19 pandemic were enacted, according to a Statistics Canada report.

The agency found that total retail sales fell by 17.9 per cent as Canadians increasingly sheltered in place between February and May and brick-and-mortar stores closed their doors.

Even so, shoppers rushed to make online purchases, with sales surging 99.3 per cent during the period.

Statistics Canada said e-commerce sales hit a record $3.9 billion in May, a 2.3 per cent increase over April and 99.3 per cent increase over February.

E-commerce sales more than doubled year over year, with a 110.8 per cent increase compared with May 2019.

Kostya Polyakov, partner and national industry leader for KPMG’s consumer and retail practice in Vancouver, said “the split between e-commerce purchases and in-store purchases has changed forever,” but it won’t always be as extreme as the numbers reported by Statistics Canada on Friday.

“I spend a lot of time with all the top retailers in the country,” Polyakov said. “I think the consensus is certainly you will see a return [of shoppers] to stores.”

The report from Statistics Canada found all 11 retail subsectors with e-commerce sales saw those sales increase.

The record gains in e-commerce occurred as total retail sales experienced record declines, the report says, with April data showing the most stark contrast.

Retail sales that month plummeted to $33.9 billion, down 29.1 per cent from February and 26.4 per cent from the year before. E-commerce increased 63.8 per cent in April.

From February to April, only the food and beverage subsector saw an increase in in-store sales, which were up 3.3 per cent, while e-commerce sales surged 107 per cent. In-store sales declined for general merchandise stores, building material and garden equipment and supplies dealers, and health and personal-care stores.

Other retail trade subsectors — such as furniture and homefurnishings stores, sporting goods, hobby, book and music stores, and clothing and clothingaccessories stores — saw much sharper declines in in-store sales from February to April 2020.

As in-store sales decreased for these subsectors, e-commerce sales increased.

Marty Weintraub, national retail leader at Deloitte Canada, said not all retailers face the same level of challenges when it comes to the move to online shopping.

For example, consumers might still be delaying large purchases on some types of items, out of fear that unemployment could be around the corner, Weintraub said.

“We don’t believe the e-commerce rates we have seen will stay at the levels we have seen them. We are already starting to see a little pulling back, most notably in apparel,” Weintraub said.

“But [e-commerce rates] will be higher than where it was before the pandemic, absolutely.”

Statistics Canada said it will continue to update the e-commerce data to assess the long-term changes after the pandemic, noting that, as stores reopened in May, the proportion of e-commerce sales was 10 per cent, down from a record high of 11.4 per cent in April.

“Will the COVID-19 pandemic have a lasting impact on the retail trade sector? Small businesses are increasingly turning to e-commerce platforms, and are using these platforms in innovative ways,” the report said.

Brick-and-mortar stores, particularly small ones with little online presence, may scoop back some of the recent online sales by making sure their inventory is up-to-date, Polyakov said.

“If you need a new pair of ice skates for your kid’s hockey practice tomorrow, retailers want you, the consumer, to say: ‘You’re better off running out to Sport Chek, because we will for sure have those skates for him,’ rather than waiting, you know, two, three days for Amazon to ship them to you,” Polyakov said.

Polyakov expects there is a group that bought something online during the lockdown that they’d rather try in store, such as shoes or a tent.

Second, a group of consumers have had to learn e-commerce systems, and were previously less accustomed to online shopping technology. These two groups helped push online sales higher during the lockdown, Polyakov said.

Some, particularly older generations, might keep taking advantage of the convenience of online shopping, Polyakov said, especially as some shopping malls are prioritizing appointments over browsing.