When looking at how fast stay-at-home orders came into effect, social distancing, work from home, and masks became more normal it’s no surprise that retail and stores took a hit in sales during March. Even with online orders and outside pick up to help ease people’s minds and keep everyone safe, many people are not shopping. You can see this fear and unease in people even in statistics, looking at retail sales data for March has had a significant decrease.
Retail Sales Data
Statistics Canada released record-breaking sales data for retailers in the country. The data is broken out by each sector and you can clearly see what has happened to non-essential businesses when they were forced to close their doors halfway through March.
Looking at the March sales data you can capture a glimpse into the panic during the first weeks of closure and see the overall decline in sales of 10 percent in March to approximately $47 billion, just as the lockdown was starting to take effect. According to the Financial Post, only 40% of retailers were closed for an average of five business days in March. However, 91% of clothing and other such accessory stores were closed for an average of 13 days.
What is the data showing and what does it mean? Although it looks like there was a decline of 10 percent in March, if we take out gasoline and auto sales, the stats actually reveal an increase of 2.8% in retail sales in March 2020, driven mainly by grocery sales. Grocery sales have had a significant increase, accounting for a third of retail in March.
April however is likely a different story as retailers were forced to be closed for the whole month. StatsCan is estimating that Aprils’ data will show approximately a 15 percent decline in sales.
Overall as businesses are closed in May as well, this back-to-back decline for such a long period of time will be new unchartered waters for all of us.
Who are the Losers and Winners during March 2020?
One thing is certain; many Canadians are itching to go back to normal, so the question is, where are we headed next?
The main deciding factor between winners and losers during this time is if it is an essential or non-essential retail business.
Retailers that sell things such as clothes, shoes, and luxury goods have been some of the hardest-hit, they lost half their retail sales if not more, as compared to last year during the same time. Retailers that did the best obviously include groceries, but also beer, liquor, and beverages; earning 20 to 30 percent more compared to March in 2019.
Other sectors that did well include health and personal care that had a 4.6 percent increase, e-commerce jumped up by 40.4 percent, and cannabis climbed up 19.2 percent.
The stark contrast in these numbers and each different market show a true divide between the retailers directly affected and those who actually boosted profits or faired well. As investors, we need to stay on top of knowing who were the winners, and who will continue to be to know exactly where to direct our investments.
As the data shows, Canada retail had varying outcomes during March 2020 but overall did okay. Losses were found in more luxury services and retail businesses but boosted in essential services. April will show huge declines in sales because of the month-long closure but May will hopefully show a bit of bounce back with retailers finding ways to still provide their services.
Which businesses will bounce back and who will drive the eventual economic recovery, is ultimately the largest question of all and what everyone will be watching for.