Non-store retailers

Overall non-store retailers posted a robust increase in revenues in 2003, but their share of the Canadian retailing market remained virtually unchanged.

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 are establishments delivering products such as heating oil and newspapers to homes.

In 2003, non-store retailers provided $12.1 billion in goods and services, a robust 7.8% increase over 2002. In spite of the advance, this retail format has made only modest inroads into the Canadian retailing market, accounting for a mere 3.3% share in 2003.

Fuel dealers, which accounted for 43.5% of total non-store retailers operating revenues in 2003, registered a 12.4% increase. The gain reflected much higher fuel oil prices in 2003, compared with 2002 when prices declined. Electronic shopping and mail-order houses, the second-largest group at 36.3%, saw operating revenues increase by 7.0% in 2003. For the second consecutive year, sales by Canadian Internet pharmacies to United States customers are largely responsible for the gain. Direct sellers, the third largest industry group at 14.3%, recorded a 0.4% decline in revenue, while vending machine operators, the smallest industry group at 6.0%, recorded a modest increase of 1.3%.

Combined, gross margins for non-store retailers fell to 35.0% in 2003 from 38.3% in 2002, reflecting increased competition and the inability to fully pass on to customers the higher cost of purchased merchandise. This was particularly the case for fuel dealers and electronic shopping and mail-order houses. Vending machine and coffee service operators had the highest gross margin at 51.3% in 2003, followed by direct sellers at 49.7% and electronic shopping and mail-order houses at 38.1%. Fuel dealers recorded the lowest gross margin at 25.3%, down from 28.1% in 2002.

Overall, operating profits for non-store retailers also decreased, to 7.0% in 2003 from 8.3% in 2002. In spite of the high gross margin, vending machine and coffee service operators had the lowest rate of return with operating profits accounting for a mere 1.4% of operating revenues in 2003. The highest operating profit was reported by fuel dealers, at 9.7%, and direct sellers, at 6.4%. Electronic shopping and mail-order houses recorded an operating profit of 4.9%.

Of the 10 non-store retail major commodity groups, 5 posted higher sales. The most notable increase was recorded in health and personal care products (+33.2%), largely as a result of noticeably higher sales of prescription drugs by Canadian Internet pharmacies. Household and automotive fuels, oils and additives also registered a strong increase (+14.3%), reflecting much higher fuel oil prices in 2003. The most noteworthy decline was recorded in clothing, footwear and accessories (-13.0%).

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.