Statistics Canada is pointing to a drop in retail sales for May. Total sales were down 1.4 percent or $69.2 billion. All major sectors struggled this month, most saw it worse than food and beverage. Further, motor vehicle and parts dealers saw a nosedive. These sharp drops may not be permanent if June’s figures hold true, with a 1.6 percent increase projected.
Retail sales experienced a significant drop in nearly every category. Retail sales were negative for nearly all sectors — except food and beverage retailers, which were down 1.2 percent. Interestingly, industries such as beer, wine, and liquor retailers saw even worse numbers. Supermarkets, grocery stores, and department stores experienced a decline in sales. This drop was by far the biggest driver in the food and beverage industry’s overall contraction.
Motor Vehicle and Parts Dealers Struggle
Motor vehicle and parts dealers fell hard in May. Sales were down 3.6 percent. This sector, driven mostly by new car dealers, posted a robust 4.6 percent drop in sales. All of these factors combined make for a challenging environment for automotive retailers. Over the next months, they will likely continue grappling with inventory shortages and shifts in consumer purchasing power.
In all, only three of the nine subsectors registered losses for the month. With all this economic uncertainty, consumer confidence and spending patterns have come into question with this latest economic downturn. Even more telling, overall core retail sales were essentially flat over this time. This is the first category that excludes, among others, gasoline stations, fuel vendors and motor vehicle and parts dealers.
Positive Trends in Other Sectors
Though most industries experienced a downturn, there were pockets of strength and industry survival during the pandemic. Building material and garden equipment suppliers reported a 1.9 percent increase in sales, indicating ongoing investment in home improvement and gardening projects. This increase likely indicates a change in consumer preferences as individuals focus on spending money to improve their homes.
Looking ahead, June’s advanced estimates paint a brighter picture for the nation’s retail industry. A projected 1.6 percent jump would be the first sign of recovery from the struggles seen in May. Industry analysts will be watching these trends carefully to determine the path of consumer habits and the economic rebound.
