Canadian Retail Sales Declined 1.1% in January Amid Ongoing Covid-19 Restrictions

Retail sales declined for the second consecutive month in January, as pandemic-related restrictions forced non-essential retailers to curb in-person shopping.

According to Statistics Canada, retail sales fell by 1.1% to $52.5 billion in January, as 6 of the 11 subsectors suffered subdued sales. Core retail sales— which do not account for sales at gas stations and motor vehicle and parts dealers— also suffered a decline, falling by 1.4%. A number of regions across Canada tightened public health orders in wake of surging Covid-19 cases, forcing numerous non-essential retailers to close brick-and-mortar stores to consumers.

The worst declines were recorded among clothing and clothing accessories stores, where sales fell by 17.8%, marking the fourth straight month of declines. Other notable declines were noted across sporting goods, hobby, book and music stores, as well as furniture and home furnishings stores, both of which fell by 16.8% and 15.1%, respectively.

Conversely, sales at general merchandise stores— many of which were deemed essential, rose by 3.3% in January, after noting a decline in December. Building material and garden equipment and supplies stores also posted gains at the beginning of the year, rising by 2.9% as stay-at-home orders continue to spark renovation projects.

Sales at motor vehicle and parts dealers dropped by 1% in January, marking the third consecutive month of declines. The contraction was largely the result of reduced sales at used car dealers, which fell by 6.5%. In contrast, new car dealers reported a 1.2% increase in sales— the first boost in four months. Similarly, sales at gasoline stations rose by 0.9% in January, mostly as a result of higher gasoline prices.

As public health restrictions were tightened amid a rise in Covid-19 cases, an increasing number of consumers have opted to conduct their shopping online instead. As a result, Statistics Canada reported that e-commerce sales increased by 110.7% year-over-year, to a total of $3.5 billion in January. The continued popularity of e-commerce sales coincided with the notable increase in brick-and-mortar store closures at the beginning of the year.

Information for this briefing was found via Statistics Canada. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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