Transcript of the chat session on Wholesale trade, which occurred on Friday, November 27th, 2015 from 12:30 to 1:30 p.m. EST

Note: This was a bilingual chat session, which means that the participants were able to submit their questions in English or French. Statistics Canada respects the Official Languages Act and is committed to ensuring that information products of equal quality are available in both English and French. For that reason, all the questions and answers have been translated in the other official language.

 Moderator at 12:29pm
Welcome everyone! This is a bilingual chat session, which means that you can submit your questions in English or French. Our experts will respond in a timely manner and in the official language in which the question was asked.

 julyjuly0 at 12:31 PM
Does Costco count as a wholesale trader?

 Elspeth Hazell at 12:38:27
Unfortunately, we can't disclose information on any particular company, as the Statistics Act protects the confidentiality of information collected by Statistics Canada. Statistics Canada is prohibited by law from releasing any information it collects which could identify any person, business, or organization, unless consent has been given by the respondent or as permitted by the Statistics Act. However, the NAICS manual, which defines wholesale trade for our purposes, may help shed some light on your question.

"Wholesalers sell merchandise to other businesses and normally operate from a warehouse or office. These warehouses and offices are characterized by having little or no display of merchandise. In addition, neither the design nor the location of the premises is intended to solicit walk-in traffic. Wholesalers do not normally use advertising directed to the general public. Customers are generally reached initially via telephone, in-person marketing, or by specialized advertising that may include Internet and other electronic means. Follow-up are either vendor-initiated or client initiated, generally based on previous sales, and typically exhibit strong ties between sellers and buyers."

 julyjuly0 at 12:30 PM
Could you please name a few company names in the wholesale trade business?

 Steve Chadder at 12:46:39
Hello,
Unfortunately we can't disclose information on any particular company, as the Statistics Act protects the confidentiality of information collected by Statistics Canada.

 prizzetto at 12:34 PM
Could you speak a bit about how and when sales are registered in the sector and how that relates to GDP output?

 Elspeth Hazell at 12:47:32
The Monthly Wholesale Trade Survey collects data from respondents for a given reference month. That is to say, a respondent would provide data for sales they registered, from September 1 to September 30, if the reference month is September. The data are gathered and processed, and then published. These MWTS results are then used as a direct input into that month's GDP calculation (in my example, September). Does that answer your question?

 julyjuly0 at 12:32 PM
Why people employed in the wholesale trade industry earn more than double the retail trade industry?

 Steve Chadder at 12:51:51
Hello. Unfortunately, our survey does not compare salary levels between the retail and wholesale industries. Thanks

 Khalid.Yahia at 12:34 PM
Are some company services classified as wholesale even if the main company is not (e.g. IKEA's distribution network)?

 Pierre Desjardins at 12:54:16
Hello,
On the annual wholesale trade survey, we do collect information at the location level and according to the NAICS classification system. Depending on the structure of the company, part of the company could be classified as wholesale.

 moule at 12:36 PM
I heard recently that Statcan has a program called IBSP which is helping with analysis of Wholesale trade. Is this true?

 Marco Morin at 12:54:19
Hello,
Yes, it is true. IBSP stands for Integrated Business Statistics Program.
The program aims to optimize the processes involved in the production of the statistical output for both annual and sub-annual business surveys.
Then it helps with the analysis of wholesale, but also manufacturing, retail, services and other industries.
Have a nice weekend.

 eddn at 12:33 PM
Hello, I am interested in having a better understanding of the dynamics of the wholesale sector. In your opinion, what do you think of the exposure the wholesale subsector, building materials and garden equipment, has on non-residential and residential construction? Is there a substantial link between these two industries? Thank you.

 Elspeth Hazell at 12:56:46
There is indeed a link between wholesalers (in particular, those in the building material and supplies subsector), and the construction industry. Wholesalers are often suppliers of tools, materials and equipment used in the construction of residential and non-residential structures. They also supply similar goods to retailers, which may be purchased by homeowners. Wholesalers in this subsector also often export goods to other nations for their construction projects. Therefore, there is a substantial link, but it is sometimes hard to trace on a month-to-month basis because there are so many direct factors influencing sales in this subsector.

 moule at 12:33 PM
Has the wholesale sector changed with Stelco in Hamilton supplying/producing less steel?

 Elspeth Hazell at 12:59:16
As indicated earlier, unfortunately, I can't answer any questions relating to an individual company, as that information is protected by the Statistics Act.

 mccannd at 12:37 PM
Does STC plan to expand the monthly wholesale CANSIM tables to the level of the annual tables (e.g. opening and closing inventories)?

 Marco Morin at 12:59:29
Hello,
The annual and the monthly wholesale surveys were designed for different purposes. The annual survey provides detailed figures on the structure of the sector, while the monthly survey provides the trends in the sector for a given month. For this reason, there is no plan, in the foreseeable future, to expand the number of variables covered by the monthly wholesale survey. Have a nice weekend.

 julyjuly0 at 12:33 PM
How is the output of wholesale trade calculated? Is it the selling price of the product minus the price they pay for the product in the first place?

 Steve Chadder at 13:00:57
Hello,
We measure the output of wholesale trade (on the Annual Wholesale Trade Survey) by calculating the gross margin. The gross margin is the operating revenue minus the cost of goods sold. Thanks

 prizzetto at 12:54 PM
Could you clarify how the timing of sales work? For example, if a wholesaler enters into an agreement in June to provide a manufactured good to a retailer, but the wholesaler only receives the manufactured good in July and only delivers the good to the retailer in August, when will the sale be registered in the survey? June, July or August? Thanks

 Elspeth Hazell at 13:03:56
In almost all cases, the sales are reported in the month in which they are registered. In your example, that would be when the wholesaler bills the retailer or receives payment for that shipment (August). Delays such as those in your example can make wholesale sales quite "lumpy." By that I mean that there may be peaks and valleys in sales on a month-to-month basis even though a company is not experiencing large changes in its business.

 marva.ellis at 12:40 PM
Hello... Wholesale trade should be the link between local manufacturing, imports and retail trade. Are the trends in Ontario's wholesale trade influenced more by the volume of imports or by the amount of goods manufactured locally?

 Marco Morin at 13:05:19
Hello,
You are asking a very interesting question. However, the link among these sectors for Ontario has not been analyzed yet. Have a nice weekend.

 moule at 12:45 PM
Where can I obtain more information about Wholesale price indicies?

 Pierre Desjardins at 13:05:36
Hello,
You can obtain information on the Wholesale Services Price Index from The Daily. Please also visit the links below to get more information on this.
Wholesale Services Price Index
Wholesale Services Price Index survey information on data sources and methodology

 atekeste at 12:38 PM
What barriers to entry exist in this sector?

 Pierre Desjardins at 13:09:44
Hello,
We do not collect data on barriers to entries.

 dominique.lapointe at 12:34 PM
Can you talk a little bit about the role of inventories in the wholesale industry and perhaps explain why they increase faster than sales or even general economic activity?

 Elspeth Hazell at 13:11:22
That is an excellent question. Accumulated inventories in the wholesale industry can mean one of two things. First, it could be that wholesalers are stockpiling because they anticipate larger demand in the future, and want to be ready to meet their clients' needs. Second, it could be that wholesalers are unable to sell at the pace that they anticipated, so they have excess stock on hand. It is really hard to say, in general, why inventories in this sector increase at the pace they do because every industry is really different, and is affected by many different economic factors.

 eddn at 12:47 PM
In your latest publication you discuss the different ways in which wholesalers import and export their goods. I can't seem to find data by Statistics Canada that breaks down wholesalers imports and exports at the aggregate industrial level and at the subsector level. Where can I find such data?

 Marco Morin at 13:15:49
Hello,
There is no data available for wholesalers only. However, there are data available on imports and exports. Please refer to the following link as a start. Have a nice weekend.

 DEBSUN at 12:47 PM
In your expert opinion, could you please suggest a couple of dependent variables that I should consider in order to forecast annual GDP by industry for wholesale trade (2015-2020)? Thank you very much in advance for your help!

 Steve Chadder at 13:16:55
Hello,
This is a good question, but it is beyond the scope of this chat discussion. Wholesale trade is only one component used in determining GDP.
The following link will provide you with more information concerning GDP.
Thanks

 Nana Bonsu at 12:51 PM
How accurate can one be to make projections of growth in wholesale trade based on output (GDP) growth projections. In effect, can we say that an expected growth in GDP implies expected growth in wholesale trade?

 Marco Morin at 13:18:31
Hello,
It is not part of Statistics Canada's mandate to forecast or make projections. Other departments, such as Industry Canada, may help you with this.
Have a nice weekend.

 Moderator at 13:20:15
Our experts are working hard to answer your questions. Thank you for your patience!

 moule at 12:57 PM
Are wholesale numbers adjusted for seasonality?

 Marco Morin at 13:22:36
Hello,
Yes, they are for the data from the Monthly Wholesale Trade Survey (MWTS), as you can see in our releases. Have a nice weekend.

 eddn at 12:43 PM
It's true, as you suggest in The Daily publication that wholesalers work "behind-the-scenes" and this sometimes makes it difficult to track their linkages within the economy. What kind of indicators do you suggest looking at in order to have a better understanding of their presence in the economy and their linkages with other sectors within the economy?

 Elspeth Hazell at 13:23:30
That is a difficult question to answer. Retail sales, manufacturing sales, imports and exports are all useful indicators related to wholesale trade, but the extent to which they influence or are influenced by wholesalers is different and not always clear. In its monthly release, the Monthly Wholesale Trade Survey tries to identify and highlight related indicators when they are linked to monthly movements in a given industry or subsector, so that could be one useful source of information. The Supply and use tables published by the System of National Accounts are also useful for understanding the structure of the Canadian economy, so those tables may shed some light on relationships between wholesalers and the rest of the economy.

 mbriss29 at 12:53 PM
There is a lot of overlap between the manufacturing sector and the wholesale trade sector. How does Statistics Canada determine whether a firm is classified as a manufacturer (NAICS 31-33) or a wholesaler (NAICS 41)?

 Steve Chadder at 13:26:52
Hello,
Statistics Canada uses the North American Industry Classification System (NAICS 2012) to determine whether a firm is a manufacturer or wholesaler.
Thanks

 Ailuropoda at 1:03 PM
Could you comment on employment trends in wholesale trade? How have the number of jobs, wages and roles of employees in wholesale been changing?

 Marco Morin at 13:26:53
Hello,
Thank you for your question. The data on this comes from the Survey of Employment, Payroll and Hours (SEPH). Please find the data at the following hyperlink.
Have a nice weekend.

 TrevorRaffard at 1:08 PM
1. What is the average margin wholesalers try to achieve when working with products in the convenience store space in Canada versus the US?

 Pierre Desjardins at 13:28:10
Hello,
We do not publish information on products and we do not do any comparison with the U.S.

 ejheese1 at 12:52 PM
Could you elaborate a little more on eddn's question about links between construction and wholesale? There is little data on renovation. Can the wholesalers' sales of building materials be used to estimate renovation? Do builders of new construction get their supplies mainly from wholesalers or mainly directly from factories? What portion of building material sales are included in retail trade?

 Elspeth Hazell at 13:30:57
There's no clear answer. I don't know how much construction firms purchase from wholesalers vs. from manufacturers or other businesses, nor do I know what portion of building material supplies in Canada are sold by retailers. I do not think that the wholesale sector could be used to directly estimate renovation, even though wholesales sales are closely related to construction and renovation. There are too many different economic factors affecting wholesale sales.

 alexandre.bedard at 12:44 PM
Hello everyone, thank you first for this initiative. How auto wholesaling has evolved with the decline in the exchange rate since the beginning of the year (e.g., wholesalers shipping used cars to the U.S. because of a strong U.S. demand for Canadian cars due to low exchange rate)? It has been in the news recently.

 Pierre Desjardins at 13:34:36
Excellent question, but we have not done any study on this topic yet.
Thanks

 mbriss29 at 13:11 PM
Factory-less good producers are classified as wholesalers though some argue they have more in common with manufacturers and should be classified as such (see Economic Classification Policy Committee in the USA and OMB proposal to amend NAICS 2017 - though the proposal was suspended). The general argument was that these companies are manufacturers in that they control the design and development of a product and only outsource the transformation of materials to take advantage of low labour costs, possible abroad. What work is StatsCan doing on factoryless good producers and do you have any thoughts on this potential classification issue? Thank you

 Marco Morin at 13:37:05
Hello,
Statistics Canada is aware of the longstanding issue of factoryless goods producers (FGP). Discussions and analysis are ongoing with respect to your question.
Please note, however, that this issue is more relevant in the United States. Have a nice weekend.

 prizzetto at 13:12 PM
Thanks for you answer on timing. One thing I've noticed by playing around with the data and running some simple regressions is that growth in imports and exports in the relevant products for the wholesale subsectors is often significant in the current month and the next month. I.e. exports in July help explain wholesale trade in June. Any idea why that might be?

 Elspeth Hazell at 13:39:13
This all goes back to the timing of when sales are registered. Often, import and export activity and wholesale sales happen in the same month, but that is not always the case. A wholesaler may export a good and receive payment or bill the client for the good in the following month. Or, a wholesaler may import the good it intends to wholesale, but not sell that good (and register the sales) for several months, especially in the case of durable goods.

 farivarb at 13:25 PM
Hello. In the introductory stats you have provided I noticed that retail sales were substantially lower than wholesale sales. I understand that changes in inventory and shrinkage could count for some of the difference. However, the retail markup should substantially lift the numerical figure for retail sales vs. wholesale. Do the numbers indeed add up? If not could inaccurate or underreporting at the retail level account for a good part of it? In case the answer to the latter question is affirmative what policy recommendations this may entail to minimize them?

 Steve Chadder at 13:41:11
Hello,
Please keep in mind that wholesalers not only sell to retailers but also to other businesses and institutions.
Thanks

 mccannd at 13:31 PM
How about monthly wholesale, inventories by provinces?

 Marco Morin at 13:41:43
Hello,
The purpose of the survey is to calculate the inventories at the national level. However, we are always looking at ways to improve the coverage and the pertinence of our surveys. We appreciate your suggestion.
Have a nice weekend.

 alexandre.bedard at 13:11 PM
What are the differences between wholesale inventories in the monthly survey and those in the National Economic Accounts (e.g. composition, different classifications, etc.)?

 Elspeth Hazell at 13:42:21
The primary difference is that the Monthly Wholesale Trade Survey excludes three industries that are included in the measure published in the National Economic Accounts. These exclusions are oilseed and grain merchant wholesalers (NAICS 41112), petroleum and petroleum products merchant wholesalers (NAICS 412) and business-to-business electronic markets, and agents and brokers (NAICS 419).

 marva.ellis at 13:17 PM
Do the monthly survey results align directly with the annual (i.e. can they be added to get the annual totals). This is in reference to the point mentioned earlier about the annual survey and the location level data. Are the variables the same in the monthly and annual surveys?

 Elspeth Hazell at 13:47:45
No, there will also be some discrepancies because they are two separate survey programs, and the two programs collect different variables (the monthly survey collects only sales and inventories, while the annual survey collects data on a wide range of financial variables). In addition, the monthly survey excludes three industries covered by the annual survey (oilseed and grain merchant wholesalers (NAICS 41112), petroleum and petroleum products merchant wholesalers (NAICS 412) and business-to-business electronic markets, and agents and brokers (NAICS 419)). There are also some methodological differences that will contribute to the discrepancies.

 Moderator at 13:50 PM
The chat session is now over. Thank you for your questions and comments! If our experts did not have a chance to respond to your question, we will follow-up with you by email in the next few business days. The full transcript of this chat session will be made available on our website shortly. Have a great day!

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