Key findings
- In November 2021, Canadian retail sales totaled $58.1 billion, an increase of 4.4% YoY
- Clothing stores saw a 25.3% YoY increase in sales
- Retail e-commerce sales were up 1.1% YoY
- E-ecommerce sales totaled $4.3 billion in November, accounting for 6.9% of total retail trade
- In December 2021, Canada’s Consumer Price Index (CPI) increased by 4.8% YoY.
- Improvement is seen in terms of recovery, though uncertainty remains about a full retail reset with 2022 inheriting supply chain issues, labor shortage and uncontrolled inflation.
In terms of a reset, 2022 carries forward a wave of unrest with supply chain disruptions and renewed levels of inflation. Retailers will need to continue to adapt in the face of new challenges. They must pivot their strategies in the direction of changing consumer needs and the rising global importance of sustainable practices. They must constantly innovate and expand their horizon to stay on the path of recovery.
Statistics Canada confirms that as compared to November 2020, retail sales rose by 4.4% in November 2021, totaling $58.1 billion. Clothing stores saw a 25.3% increase YoY. The graph depicts the recovery of the retail industry after a dip in 2020. 2021 holiday season was demand-fueled and different from the 2020 holiday season in many ways, most notably: large rollout of the vaccination for COVID-19 vaccine, improved economic outlook, increased employment, year-end bonuses in selective industries as well as an accumulation in household savings.
Retail Sales
Merry Holiday Spending & A Look Forward
Canadians headed into the holiday season with a renewed spirit of optimism bolstered by household savings and consumer confidence. Shopping for gifts coincided with a wardrobe makeover for many consumers as they expected to return to the office in 2022. According to the PwC 2021 Canadian holiday outlook, Canadians were expected to increase their holiday spending by 29% in comparison to last year, with an average spending of $1420. The surge in retail trade was buoyed by the spirit of the holiday season as well as the sentiment of adapting towards the new “normal” life. This was constrained by supply chain issues and labor shortages. Many people even started to shop earlier this year to compensate for the well-advertised shipping delays.
E-commerce continued to be a significant channel for retail trade. According to the latest Statistics Canada data, e-commerce sales were up 1.1% and electronic shopping and mail-order sales saw a 4.4% increase YoY. Some consumers were still drawn to brick-and-mortar retailers to avoid shipping costs and potential returns. The share of e-commerce sales out of total retail sales fell 0.4 percentage points compared with previous year, attributed to supply chain woes and rising inflation.
Retailers continue to navigate changes in consumer sentiments, uncertainty in the economy caused by Omicron, and changing return to office plans. Sales are expected to continue rising from Q1 2022 onwards.
Reset or Bust
Though uncertainty remains, a reset will involve continued growth of AI, smaller independent businesses embracing e-commerce the way larger national chains already have, increased levels of foot traffic, supply chain improvements, controlled inflation and a sentiment of optimism, recovery and growth within retailers.
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