Total Retail Sales

The first drop in retail sales since the 1990s occurred during the great financial crisis of 2008 and 2009. Over these years, falling consumer confidence caused consumers to cut back on purchases, ultimately causing total retail sales to fall 0.3% and 0.6% in 2008 and 2009, respectively. However, sales recovered quickly in 2010, surpassing the previous high in 2008. Sales were driven by steady income growth, despite relatively high unemployment during the period. Additionally, the robust housing market kept consumer confidence high, which also stimulated retail sales. As a result of these trends, total retail spending rebounded rapidly in 2010 and then returned to more steady growth over subsequent years.

Over the past decade, consumer debt has increased in line with retail spending, which poses a structural threat to retail spending growth. Moreover, low-interest rates have enabled consumers to more easily service debt obligations, which limits the negative effects of higher debt levels. Additionally, while total spending has grown during the period, the Canadian economy received a significant shock in late 2015, when plummeting crude oil prices stifled activity in many of the nation’s key sectors. In turn, retail sales grew a relatively strong 4.4% in 2017, largely due to a combination of rising consumer prices and increased levels of per capita disposable income. Retail sales began to slow in 2018, growing only 1.3% before actually declining marginally in 2019 driven by economic concerns.

In 2020, the onset of the COVID-19 (coronavirus) pandemic resulted in an unprecedented decline in retail sales, as consumer spending dropped and unemployment rose swiftly amid business closures. With restrictions placed to stop the spread of the virus inhibiting the ability of retailers to operate, total retail sales declined 2.3% in 2020 alone. This is despite the rapid pivot and adaptation of many businesses to e-commerce platforms. Total retail sales rose 3.8% in 2021, reclaiming some losses from the pandemic as vaccination uptake facilitates business activity and easing restrictions. Pent-up demand as consumer uncertainty fell also drove increased retail sales in 2021. Retail sales are expected to grow once again in 2022 as the Canadian economy continues to recover. It must be noted that much of this stems on the speed of distribution of coronavirus vaccines. Despite lifted restrictions in retail settings, consumers were wary to make discretionary purchases. Rising inflation and threat of recession, driven by rising cost of goods, is tempering consumer spending and is the remains the primary threat to retail sales towards the end of the current period. Retail sales are expected to increase by 1.5% in 2025 as retailers raise prices to offset higher costs, boosting sales figures despite growing scrutiny over price gouging.