Consumers flocked to online shopping as pandemic hit, with e-commerce sales up 99%

Consumers flocked to online shopping as pandemic hit, with e-commerce sales up 99%

Consumers flocked to online shopping as pandemic hit, with e-commerce sales up 99%

Canadian consumers flocked to online shopping as the measures to combat the COVID-19 pandemic were enacted, according to a Statistics Canada report.

A new report from the agency found that total retail sales fell by 17.9 per cent as Canadians increasingly sheltered in place between February and May and brick-and-mortar stores closed their doors.

Even so, shoppers rushed to make online purchases, with sales surging 99.3 per cent during the period.

Statistics Canada says e-commerce sales hit a record $3.9 billion in May, a 2.3 per cent increase over April and 99.3 per cent increase over February.

E-commerce sales more than doubled year over year, with a 110.8 per cent increase compared with May 2019.

Kostya Polyakov, partner and national industry leader for KPMG’s consumer and retail practice in Vancouver, says that “the split between e-commerce purchases and in-store purchases has changed forever,” but that it won’t always be as extreme as the numbers reported by Statistics Canada on Friday.

“I spend a lot of time with all the top retailers in the country,” says Polyakov. “I think the consensus is certainly you will see a return (of shoppers) to stores.”

The report from Statistics Canada found that all 11 retail subsectors with e-commerce sales saw those sales increase.

The record gains in e-commerce occurred as total retail sales experienced record declines, the report says, with April data showing the most stark contrast. Retail sales that month plummeted to $33.9 billion, down 29.1 per cent from February and 26.4 per cent from the prior year. Meanwhile, e-commerce increased 63.8 per cent in April.

From February to April, only the food and beverage subsector saw an increase in in-store sales, which were up 3.3 per cent, while e-commerce sales surged 107 per cent. In-store sales declined for general merchandise stores, building material and garden equipment and supplies dealers, and health and personal care stores.

Other retail trade subsectors such as furniture and home furnishings stores, sporting goods, hobby, book and music stores, and clothing and clothing accessories stores saw much sharper declines in in-store sales from February to April 2020. As in-store sales decreased for these subsectors, e-commerce sales increased.

Marty Weintraub, national Retail leader at Deloitte Canada, says that not all retailers face the same level of challenges when it comes to the move to online shopping. For example, consumers may still be delaying large purchases on some types of items, out of fear that unemployment may still be around the corner, said Weintraub.

“We don’t believe the e-commerce rates we have seen will stay at the levels we have seen them. We are already starting to see a little pulling back, most notably in apparel,” said Weintraub. “But (e-commerce rates) will be higher than where it was before the pandemic, absolutely.”

Statistics Canada said it will continue to update the e-commerce data to assess the long-term changes after the pandemic, noting that as stores reopened in May, the proportion of e-commerce sales was 10 per cent, down from a record high of 11.4 per cent in April.

“Will the COVID-19 pandemic have a lasting impact on the retail trade sector? Small businesses are increasingly turning to e-commerce platforms, and are using these platforms in innovative ways,” the report said.

Brick-and-mortar stores, particularly small ones with little online presence, may scoop back some of the recent online sales by making sure their inventory is up-to-date, Polyakov says.

“If you need a new pair of ice skates for your kid’s hockey practice tomorrow, (retailers) want you the consumer to say, ‘You’re better off running out to Sport Chek, because we will for sure have those skates for him,’ rather than waiting, you know, two, three days for Amazon to ship them to you,” says Polyakov.

Polyakov expects there is a group that bought something online during the lockdown that they’d rather try in store, such as shoes or a tent. Second, a group of consumers have had to learn e-commerce systems, and were previously less accustomed to online shopping technology, such as some members of Baby Boomers or Generation X. These two groups helped push online sales higher during the lockdown, said Polyakov.

Some, particularly older generations, may keep taking advantage of the convenience of online shopping, says Polyakov, especially as some shopping malls are prioritizing appointments over browsing. The bigger questions, says Polyakov, is whether people will continue to buy items online that they prefer to try in the store, such as winter coats.

The new data from Statistics Canada is the latest peek into a changing retail sector, also reflected in two other recent data releases.

Overall retail sales data for May, released on July 21, indicated that while about 23 per cent of retailers were closed during the month, for an average of five business days, sales are 80 per cent recovered from the worst of the pandemic period.

The consumer price index, released on July 22, suggested that consumer behaviour has shifted so much that it has thrown off the inflation index.

“Where we settle will depend on how the pandemic unfolds,” said Weintraub. “The longer we are in this state of being, the greater the likelihood that this (online shopping) behaviour will stick.”

This report by The Canadian Press was first published July 24, 2020.

Canadian consumers flocked to online shopping as the measures to combat the COVID-19 pandemic were enacted, according to a Statistics Canada report.

A new report from the agency found that total retail sales fell by 17.9 per cent as Canadians increasingly sheltered in place between February and May and brick-and-mortar stores closed their doors.

Even so, shoppers rushed to make online purchases, with sales surging 99.3 per cent during the period.

Statistics Canada says e-commerce sales hit a record $3.9 billion in May, a 2.3 per cent increase over April and 99.3 per cent increase over February.

E-commerce sales more than doubled year over year, with a 110.8 per cent increase compared with May 2019.

The report found that all 11 retail subsectors with e-commerce sales saw those sales increase.

The record gains in e-commerce occurred as total retail sales experienced record declines, the report says, with April data showing the most stark contrast. Retail sales that month plummeted to $33.9 billion, down 29.1 per cent from February and 26.4 per cent from the prior year. Meanwhile, e-commerce increased 63.8 per cent in April.

From February to April, only the food and beverage subsector saw an increase in in-store sales, which were up 3.3 per cent, while e-commerce sales surged 107 per cent. In-store sales declined for general merchandise stores, building material and garden equipment and supplies dealers, and health and personal care stores.

Other retail trade subsectors such as furniture and home furnishings stores, sporting goods, hobby, book and music stores, and clothing and clothing accessories stores saw much sharper declines in in-store sales from February to April 2020. As in-store sales decreased for these subsectors, e-commerce sales increased.

Statistics Canada said it will continue to update the e-commerce data to assess the long-term changes after the pandemic, noting that as stores reopened in May, the proportion of e-commerce sales was 10 per cent, down from a record high of 11.4 per cent in April.

“Will the COVID-19 pandemic have a lasting impact on the retail trade sector? Small businesses are increasingly turning to e-commerce platforms, and are using these platforms in innovative ways,” the report said.

The new data from Statistics Canada is the latest peek into a changing retail sector, also reflected in two other recent data releases. The consumer price index, released on July 22, suggested that consumer behaviour has shifted so much that it has thrown off the inflation index.

Overall retail sales data for May, released on July 21, indicated that while about 23 per cent of retailers were closed during the month, for an average of five business days, sales are 80 per cent recovered from the worst of the pandemic period.

This report by The Canadian Press was first published July 24, 2020.

Anita Balakrishnan, The Canadian Press

Business

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