Retail sales were on a downward trend in 2015, “the year of the economic recovery that wasn’t,” according to Toronto-based retail consultant Ed Strapagiel.
In an analysis of Statistics Canada figures for up to October 2015, Strapagiel estimates total retail sales will reach $513.8 billion in 2015, a 2.3% increase from 2014.
“It was a year that started with pretty good promise. The first quarter of 2015 was the best and it’s gone downhill ever since,” Strapagiel tells Marketing. “We’re ending the year on a low ebb, maybe even a sour note, depending on the retailer.”
The picture for 2016 is a little bit sunnier: retail sales growth should be in the 3.5% to 4.0% range, says Strapagiel. He expects 2016 to have a slow start with growth modestly accelerating as the year plays out.
“Hopefully some form of economic recovery is going to arrive in this country, which certainly wasn’t the case for 2015. A year ago, everybody was rather optimistic… but [the recovery] never happened.”
The collapse in gasoline prices has brought the 2015 growth rate down, says Strapagiel, but that is being balanced out by big gains in motor vehicle sales. Auto dealer retail sales were up 6.3% in October versus a year ago, but gasoline station sales were down 12.8%.
The food and drug sector is expected to end the year at a 3.4% annual gain. Over half of retail sales in this sector are at supermarkets and other grocery stores, but they gained only 0.5% year-over-year in October. On the other hand, convenience stores and beer, wine and liquor stores had above average sales increases.
Health and personal care stores’ retail sales are going strong, with a 4.7% year-over-year increase in October, which was more than double the overall retail average.
The store merchandise sector is forecast to end the year with a 4.4% gain. General merchandise stores, clothing stores and furniture stores have generally been the better performers in store merchandise for much of 2015.
This year, Canadian retailers will continue to be challenged with higher costs of imported goods due to the low Canadian dollar. However, there is a silver lining: Canadians are more likely to spend their dollars at home, and retailers can encourage more Americans to cross-border shop, says Strapagiel.
The full report can be found here.