Inflation Eases as Consumers Set New Priorities
Original release date: September 23, 2022
Canadian retail sales began to slow in July with All Stores up 6.1% YOY, with All Stores Less Automotive up 5.5% YOY, and All Stores Less Automotive, Food and Pharmacies up 7.5% YOY.
A trend that has continued into July is consumers shopping at Specialty Food Stores, up 19.6% YOY and 12.5% YTD. There are numerous factors that could be contributing to this:
- Local green grocers, butchers, bakeries, etc. are not experiencing the same supply chain restrictions that larger grocery chains have had,
- Because of this, they may be experiencing lower levels of inflation overall, and
- Staycations and entertainment. With the world returning to travel, we have heard about how much of a pain it is to fly in the summer of 2022. Many people opting for staycations and spending some time in their own communities and taking the money originally allocated to travel and moving towards hosting events with high quality foods.
Furniture Stores and Home Furnishings Stores have both seen a decline in July, down -10.8% and -5.1% YOY respectively. This is a reaction to the continued supply chain woes being experienced heavily in this industry. Coupled with the downturn in the housing market, which was down 6.0% month-over-month in July, it is unsurprising that these categories are struggling when compared to their high pandemic performance.
Another category maintaining strong growth is General Merchandise Stores, which are up 13.0% YOY. Another reflection of inflation and a looming recession, this is likely due to two large players: Walmart and Costco. Both brands target the price sensitive shopper, a customer segment that grows everyday as prices continue to increase. Walmart’s Q2 revenue performance was up 8.4% and it shows through their investment into AI, rolling out their new cameras/systems to stock out-of-stock shelves faster.
July Canadian retail sales have slowed down, but we haven’t seen back-to-school sales yet. Some questions we are asking this month are:
- Who will be able to maintain their price-sensitive shoppers as inflation eases?
- Why are customers starting to return to online purchases?
- How will travel trends change with new flight cancellation laws?
- When will we see holiday sales start?
- What have YOU done to prepare for the holiday season?
Reach out to the JCWG team to prepare your holiday strategy and join us next month to see how back-to school performed.