August Sales a Positive Blip Before A Fall Drop?
Original release date: October 21, 2022
Canadian retail sales saw another month of impressive growth in August with All Stores up 8.7% YOY, with All Stores Less Automotive up 7.7% YOY, and All Stores Less Automotive, Food and Pharmacies up 8.6% YOY. According to StatsCan preliminary data for September, however, this performance won’t last.
Clothing and Accessories Stores are one of the first signs that sales are slowing down, which appear to have started to normalize in August with a growth of just 4.1% YOY. This is partly due to a -5.1% decrease YOY in Jewellery, Luggage, and Leather Goods Stores. This trend is unsurprising for the following reasons:
- This category is almost solely discretionary spending. Discretionary spending is obviously significantly affected when inflation rates are high.
- We are past peak travel times. People typically travel more in the summer, so by August, most people who needed new luggage for their summer trips have long since purchased it.
- The category was a strong indicator of people going e returning to work again post-pandemic, and now consumers have what they wanted/needed to do that.
Similar to the US retail sales, Building Material and Garden Equipment is up higher than expected at 12.5% YOY. When comparing to YTD, which has an increase of only 3.9%, this is even more unexpected. This category is typically seasonal by nature of the product mix, and August will often see sales decreasing slightly stores start to put their products on sale.
The upcoming holidays are top of mind with the JCWG team. There have been reports that projections for this year’s holiday season are showing a downturn of 17%. Some questions we are asking this month around holiday sales include:
- Who will be planning their holiday sales spike mainly around discounts?
- Will there be an excess of inventory with customers spending less?
- 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 September performed and if the early StatsCan prediction was right.