De­cem­ber re­tail sales down 0.5% in Canada

Black Fri­day, gift-card growth skew sta­tis­tics, econ­o­mist says

Toronto Star - - BUSINESS & CAREERS - FRANCINE KOPUN BUSI­NESS RE­PORTER

De­cem­ber’s re­tail sales fig­ures re­leased Wed­nes­day by Sta­tis­tics Canada aren’t as bad as they look, ac­cord­ing to one of Canada’s lead­ing econ­o­mists.

“We think there is a se­ri­ous is­sue with how Sta­tis­tics Canada sea­son­ally ad­justs the fig­ures for De­cem­ber,” said Dou­glas Porter, chief econ­o­mist at BMO Fi­nan­cial Group.

Ac­cord­ing to Stat­sCan, re­tail sales de­creased 0.5 per cent in De­cem­ber over Novem­ber — a de­cline that fol­lowed four con­sec­u­tive monthly in­creases in Cana­dian re­tail sales.

“The ris­ing pop­u­lar­ity of Black Fri­day is pulling a lot of sales into Novem­ber that used to hap­pen in De­cem­ber,” Porter said. “A bit more of a long-stand­ing is­sue is the in­creas­ing use of gift cards, which only get counted when the gift cards are re­deemed, so that is prob­a­bly de­lay­ing some sales out of De­cem­ber into the early months of the next year.”

Also, a smaller share of Cana­di­ans cel­e­brate Christ­mas than 10 or 20 years ago, Porter pointed out.

“Stat­sCan just can’t ad­just their sea­sonal ad­just­ment fig­ures quickly enough to take ad­van­tage of the chang­ing land­scape.”

Porter said un­ad­justed re­tail sales hit a his­toric high of $50 bil­lion in De­cem­ber and the vol­ume of re­tail sales was up 3 per cent from a year ago.

“It’s not as if Cana­di­ans stopped shop­ping,” Porter said.

An­nual re­views are con­ducted into the ways in which the data is as­sessed and Sta­tis­tics Canada is al­ways up­dat­ing and look­ing at bet­ter ways to re­port, said Sta­tis­tics Canada an­a­lyst Ja­son As­ton.

“You need at least three years to un­der­stand if it’s sea­sonal,” he said, adding that new fac­tors, such as Black Fri­day sales, have been added to the mix.

In Wed­nes­day’s re­port, the gov­ern­ment agency said lower sales were re­ported in nine of 11 sub­sec­tors, rep­re­sent­ing 82 per cent of re­tail trade.

Among the sub­sec­tors, sales at mo­tor ve­hi­cle and parts deal­ers were down 0.9 per cent. Lower sales at new-car deal­ers ac­counted for most of that de­cline, more than off­set­ting gains in sales at au­to­mo­tive parts, ac­ces­sories and tire stores.

Sales at cloth­ing and cloth­ing ac­ces­sories stores de­creased 3.7 per cent, with jew­elry, lug­gage and leather goods stores post­ing a de­cline of 12.4 per cent.

Craig Alexan­der, se­nior vice-pres­i­dent and chief econ­o­mist with the Con­fer­ence Board of Canada, pre­dicted improvemen­ts for 2017.

“As eco­nomic growth im­proves, job cre­ation con­tin­ues and in­comes rise at a mod­est pace, we should see mod­er­ate gains in re­tail spend­ing this year,” ac­cord­ing to Alexan­der.

The Sta­tis­tics Canada data re­flects the mixed bag of earn­ings re­ported by re­tail­ers in Canada and the U.S. this year, with Cana­dian Tire re­port­ing strong hol­i­day sales, Nord­strom re­port­ing over­all sales in­creases but a de­cline in profit on sales and Indigo re­port­ing an in­crease in rev­enue, based on its new, larger of­fer­ing of gen­eral mer­chan­dise. Macy’s mean­while con­tin­ues to close stores in the U.S. as it pre­dicts fall­ing sales in 2017.

Hud­son’s Bay Com­pany re­ported a slight de­crease in com­pa­ra­ble sales for the nine weeks end­ing Dec. 31, along with lower prof­its due to pro­mo­tional ac­tiv­ity.

Re­tail con­sul­tant Ed Stra­pagiel said the over­all in­crease of 3.7 per cent in Cana­dian re­tail sales in 2016 was bet­ter than the gain of 1.7 per cent in 2015, not as good as the 4.6 per cent in­crease in 2014 and in about the same ball­park as the 3.2-per-cent growth in 2013.

“In short, 2016 was about an av­er­age year for cur­rent times, which how­ever rep­re­sents a good re­cov­ery from a weak 2015,” said Stra­pagiel.

He pointed out that e-com­merce ac­counted for 3.4 per cent of to­tal re­tail sales in De­cem­ber 2016, a high for the year. The sec­ond-high­est month was Novem­ber at 3.07 per cent. “It ap­pears that on­line shop­ping is a way of beat­ing the crowds at stores and malls dur­ing the hol­i­days.”

STEVE RUS­SELL/TORONTO STAR FILE PHOTO

Re­tail sales rose 3.7 per in 2016, bet­ter than the 1.7 per cent in 2015.

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