Original release date: February 21, 2023

2022 finished slow for Canadian retail sales (at least compared to the rest of the year), with All Stores December growing 7.0% YOY and All stores Less Automotive, Food, Pharmacies up 7.1% YOY.

There are three important themes carrying over from 2022, and have been top of mind for the JCWG team when thinking about the Canadian economy:

• Inflation,
• Housing, and
• In-store shopping.

Inflation has been dominating headlines for many months now, with food and gasoline being the most impacted products. Though the inflation on Gasoline Stations’ retail sales has started to slow (only up 11.2% YOY in December, compared to 30.3% YTD), Food and Beverage Stores are still ramping up, growing 6.7% YOY, compared to 1.8% YTD. Within this category, there are trends emerging:

• Supermarkets and Other Grocery Stores are up 7.7% YOY, which is a much higher growth rate compared to earlier in 2022.
• Convenience Stores continue to be impacted as people are buying more in bulk rather than last minute/impulsively, with a growth of merely 0.4% YOY, and down -3.8% YTD.
• Specialty Food Stores, which in early 2022 were realizing impressive growth, are now only achieving 5.2% YOY growth. During the holidays, when people are hosting and usually opt for the higher-end and/or local food, the relative minimal growth compared to 2022 (12.0% YTD) is significant.

In early 2022, there was little end in sight for the booming housing market. With bidding wars and houses going hundreds of thousands of dollars over-asking, there were many categories that were along for the ride, such as Furniture Stores and Building Material and Garden Equipment. With the housing market now cooled, these categories have started to reflect this as well, down -0.2% and -5.4% YOY respectively. With people having to downsize, or even transition back to renting, as a result of increased mortgage payments, there is less desire to make home improvements, which both these categories would help their customers achieve.

In-store shopping has grown significantly in 2022, as COVID lockdowns are (hopefully) a thing of the past. Reflecting back to looming lockdowns in December 2021 and realized on December 19, 2021, Ontario customers received news that the province was again going into lockdown, which would force retailers to limit customers once again. Considering the lockdowns, JCWG was still surprised to see that ecommerce sales were once again down -2.4%. When adding the fact that Black Friday was much more significant this year than Boxing Day, the team was not surprised to see that:

• For the week of Boxing Day, Retail Footfall was down -26.4% compared to Black Friday.
• For the week of Boxing Day, Retail Clicks (online shopping) was down -3.2% compared to Black Friday.

The JCWG team is closely monitoring how these trends evolve during the year of 2023. After a volatile 2022, further changes in these three trends as well as supply chains, the labour shortage and the recession will all likely create a similar 2023. Some things we are thinking about for 2023 are:

• Where will retail customers flock to the most, shopping centres or mains streets/BIAs?
• When will labour automation start to be more commonplace in Canada?
• What categories that struggled in 2022 will see a more successful 2023?
• With a low unemployment rate, will employees start spending more of their discretionary income (even during a recession)?
• How is YOUR retail business prepared for 2023?

For 2023 retail strategy and forecasting support, reach out to JCWG and check back next month to see how January retail sales changed. We have also released this year’s highly anticipated “Retail Innovations 18” book, please visit the download page here.