Canadians Let Loose Despite Worries for the Future
Original release date: August 19, 2022
Canadian retail sales remained strong in June with All Stores up 11.1% YOY, with All Stores Less Automotive up 9.0% YOY, and All Stores Less Automotive, Food and Pharmacies up 12.5% YOY.
While Clothing and Accessories Stores did not reach the same impressive performance as seen in May, they were still up 24.5% YOY. We are continuing to attribute this to the return to work, return to travel and the return of weddings and social gatherings. Within this category, the largest subcategory growth was Jewellery, Luggage and Leather Goods Stores, up 43.8% YOY. This may also be a result of the return to travel, and more specifically the travel pains that Canadians have been experiencing. It is highly recommended by experts to utilize carry on bags rather than checking luggage, and we suspect people are purchasing carry-on friendly baggage for their first trip in 2 years.
We noticed an interesting correlation in June between Convenience Stores being down -6.0% YOY and Health and Personal Care Stores being up 10.1% YOY. These are categories that have not been traditionally competing, but we suspect that the drop in Convenience Stores is being captured at larger pharmacy chains. Loblaw Companies’ Q2 saw growth, with Shoppers Drug Mart up 5.6% and Loblaws grocery stores only up 0.9%. With people waiting for their COVID-19 test results or their vaccine boosters in these stores, customers are shopping around the store during their waits.
Our winner this month was Specialty Food Stores up 22.0% YOY, which initially surprised us with the impact on food prices with inflation. We believe this to be due to the ongoing supply chain issues. Specialty Food Stores are typically smaller, local retailers that often carry local products. It may be that consumers are unable to get a lot of their food products at larger supermarkets, so Specialty Food Stores are picking up the slack thanks to their sources and better vendor relations. The other contributing factor could be that people are entertaining more rather than going to restaurants (a larger cost to their discretionary spending) so they are having friends over instead.
June was a strong month for Canadian retail sales, though we did see the US retail sales drop in July with discretionary spending decreasing. Some questions we are asking this month are:
- Who are customers still willing to shop with on online?
- When will we see categories starting to decline?
- Why are Canadians seeming to react to inflation less than Americans?
- How will customers change their spending in reaction to more upcoming viruses like Monkeypox?
- What are YOU doing to combat the decrease in discretionary spending?
Reach out to the JCWG team to ensure you keep the wallet shares of your customers and join us next month to see if Canadian sales replicate the downward trend in the US.