Non-store retailers

Overall non-store retailers posted a moderate increase in the value of goods and services provided in the Canadian retailing market in 2002, but the picture varied considerably by industry group and commodity category.

Non-store retailers are those retailers who sell their products and services by means other than fixed point-of-sale locations. Instead, they reach consumers through a variety of means, including broadcasting of infomercials, direct-response advertising, traditional and electronic catalogues, door-to-door sales, in-house demonstrations, temporary display of merchandising (using stalls) and distribution by vending machines. Also included in this category are establishments delivering products such as heating oil and newspapers to homes.

To date, this retail format has made only modest inroads into the Canadian retailing market. In 2002, non-store retailers accounted for 3% of all Canadian retailing and provided $11.2 billion in goods and services, a 4.2 % increase over 2001.

Electronic shopping and mail-order houses, which accounted for 37% of total non-store operating revenues in 2002, saw operating revenue rise by 10.4%. The gain is partly the result of a sharp jump in sales by Canadian Internet pharmacies to United States clients. Direct sellers, the third largest industry group (15%), recorded a 5.1% advance in revenue. Vending machine and coffee service operators, the smallest industry group (6%), recorded a slight gain of 0.8%. Fuel dealers, the largest industry group (42%), registered a 0.5% decline in revenue, reflecting lower heating oil prices in 2002.

Gross margins rose slightly from 37.9% in 2001 to 38.3% in 2002 for non-store retailers. Vending machine and coffee service operators had the highest gross margin at 53.2% in 2002, followed by direct sellers at 49.7% and electronic shopping and mail-order houses at 42.5%. Fuel dealers recorded the lowest gross margin at 28.1%, up from 25.4% in 2001.

In spite of the high gross margin, vending machine and coffee service operators recorded a slight decline in operating profit in 2002 because of higher operating costs. The other three industry groups registered gains in operating profits.

Five of the 10 non-store retail major commodity groups posted advances in sales, with the most notable increase recorded in health and personal care products (+62.3%), followed by home furnishings and electronic products (+3.2%). The growth in health and personal care products was largely a result of noticeably higher sales of prescription drugs by Canadian Internet pharmacies. The most noteworthy decline was recorded in housewares and household supplies (-4.1%).

Note: The information in this report is based on the North American Industry Classification System (NAICS). The report covers establishments primarily engaged in retailing merchandise by non-store methods, and includes all sales and other operating revenues of these establishments.

Gross margin is measured by subtracting cost-of-goods sold (opening inventory plus purchases and direct costs minus closing inventory) from total operating revenues. The ratio is expressed as a percentage of total operating revenues. This measure is also known as return on sales.

Operating profit is obtained by subtracting total operating expenses plus cost-of-goods sold from total operating revenues. The ratio is expressed as a percentage of total operating revenues.

Definitions, data sources and methods: survey number 2448.

For general information or to order data, contact Client Services (1-877-421-3067; 613-951-3549; retailinfo@statcan.gc.ca). To enquire about the concepts, methods or data quality of this release, contact Serge Gervais (613-951-9218; serge.gervais@statcan.gc.ca), Distributive Trades Division.