Retail Council says stores on slow road to recovery

July 24, 2020, Toronto, Ont. – Retail Council of Canada (RCC) notes with cautious optimism that the May retail numbers reported recently by Statistics Canada provide some hope that consumers are returning to retail stores but continues to believe that recovery for most retailers will be very slow throughout the next several months.

The month-over-month increase of 18.7 per cent illustrates some pent-up demand as consumers returned to stores across the country to shop for a variety of discretionary products, the RCC states, highlighting the role shopping plays in the lives of individuals, both culturally and socially, as a way to feel “normal” again.

On the other hand, year-over-year core retail sales decreased by 5.5 per cent and core retail sales excluding grocery decreased by 12 per cent. Removing grocery, auto and gas from Statistics Canada’s calculation clearly shows that recovery will continue to be slow and unpredictable for many retailers as they adjust to changing consumer habits, new restrictions in stores, and risks of further COVID outbreaks.

Although most retail subsectors were up in May, including furniture, clothing, footwear, and sporting goods, they are far from having rebounded to sales levels seen before COVID-19, the RCC states, suggesting that the brick-and-mortar stores are still facing greater challenges, particularly those who rely on sales from tourists or business travel as both are happening at a much lower degree.

As Canadians adjust to their lives in the COVID era with more focus on the home, the RCC expects to see some key subsectors perform better. Based on shopping trend data provided by retailers of all sizes across Canada, the RCC expects this lifestyle trend to continue throughout the summer as the focus moves outdoors.

E-commerce continues to be an important channel for retailers and consumers. The report shows that e-commerce was eight per cent of total retail trade in May. RCC believes that this channel grew at a much greater pace than indicated since major pure-play online sellers such as Amazon are categorized as warehouses and therefore, not included in the calculation. RCC believes the e-commerce number to be closer to 13 per cent of total retail sales.

RCC represents more than 45,000 storefronts in all retail formats, including grocery, department, specialty, discount, independent retailers and online merchants.