Canadian retail sales plunge record 10% in wake of COVID-19

In Alberta, sales fell by 13 per cent to $5.9 billion, says Statistics Canada report as COVID-19 puts a serious dent on the economy

Canadian retail sales fell for the first time in five months, plunging 10 per cent to $47.1 billion in March and the drop is the largest on record in the wake of COVID-19, says Statistics Canada.

In Alberta, sales fell by 13 per cent to $5.9 billion.

“As a result of this pandemic, many Canadian retailers shut down operations mid-month, curtailed hours and customer flow in the stores that remained open, all of which contributed to changes in the shopping habits of consumers,” said the federal agency.

“Based on respondent feedback, about 40 per cent of retailers closed their doors during March. The average length of shutdowns was five business days. In the clothing and clothing accessories stores subsector, 91 per cent of retailers were closed in March for an average of 13 days.”

StatsCan said record declines at motor vehicle and parts dealers, clothing and clothing accessories stores and gasoline stations led the March decrease as sales were down in six of 11 subsectors, representing 39.2 per cent of retail trade.

“Given the rapidly evolving economic situation, Statistics Canada is providing an advance estimate of April sales. The advance results for April indicate that retail sales decreased 15.6 per cent. Owing to its preliminary nature, this figure should be expected to be revised,” it said.

“The COVID-19 pandemic caused many Canadian retailers to open or expand their e-commerce platforms in March in response to physical distancing measures and storefront closures. On an unadjusted basis (that is, not seasonally adjusted) retail e-commerce sales were $2.2 billion in March, accounting for 4.8 per cent of total retail trade. This uptick in retail e-commerce was atypical for March and similar to the pattern normally observed at the start of the annual holiday shopping period. On a year-over-year basis, retail e-commerce increased 40.4 per cent, while total unadjusted retail sales declined 9.6 per cent,” said the federal agency.

“When adjusted for basic seasonal effects, retail e-commerce grew 16.3 per cent.”

While many retailers were hurt by COVID-19 in March, some reported record higher sales. For example, sales at food and beverage (+22.8 per cent) and general merchandise (+6.4 per cent) stores rose to the highest level on record and posted their largest monthly gain since the beginning of the series, said Statistics Canada, adding that sales at health and personal care stores rose 4.6 per cent in March, the fifth consecutive monthly increase and the highest sales level on record.

“Retailers have been one of the hardest hit segments during this crisis, and data for March show an ugly situation even before the economy was tamped down for a full month,” said Royce Mendes, an economist with CIBC Economics

“Many retailers tried to lean more on online platforms, with an abundance of sales shifting towards e-commerce, alleviating some of the pain from physical distancing measures. Of course, panic-buying of food and household essentials also propped up total sales in March. But with sales in categories like autos dropping almost 40 per cent and clothing falling more than 50 per cent, those increases weren’t anywhere near enough to offset the deep losses from COVID-19. Nevertheless, despite the terrible showings for March and April, the easing of restrictions should lead to some ground being regained from this point on for retailers,” he said.



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