Sales Recovery Illusory

The latest retail sales statistics indicate a big recovery in Canadian retail sales, says Ed Strapagiel, a retail consultant. “Total retail sales spiked and increased by a nose-bleed 34.9 per cent year-over-year over the three-month ending May 2021. The underlying 12-month trend has also turned sharply upward and is likely headed for a record-breaking increase in 2021.” However, he says that a large part of these gains is illusory arising from the mathematics. “Suppose sales in some category were $80 billion, but then fell to $40 billion, a 50 per cent decline,” he says. “A year later sales came back up to the old level of $80 billion, an increase of $40 billion, but on top of the new base of $40 billion. This is a 100 per cent increase, which seems much higher. But it's still the same $40 billion moving in and out. You can only take money to the bank, not percentages. The dramatic current increases in Canadian retail sales are not so much a reflection of how good things are now, but of how bad things were a year ago.” While the food and drug sector did extremely well during the height of the COVID pandemic, things in this sector are now returning to more normal conditions. Meanwhile, the overall gains have been accelerated by a massive rebound in the automotive and related sector. The furniture and home furnishings sector, which was also hit hard when the pandemic set in, showed gains of 83.8 per cent year-over-year. As well, Strapagiel says eCommerce sales are cooling off as brick-and-mortar sales improve. Nevertheless, total eCommerce sales were still up 19.6 per cent year-over-year for the three months ending May 2021.