Main article

1. Summary
2. Slowdown in retail sales growth driven by declining sales at new car dealers
3. Volatile sales performance over the course of the year
4. Employment growth in the retail sector mirrors retail sales growth in 2008
5. Sales level off in Alberta and British Columbia
6. Although slowing, sales growth in Saskatchewan leads the provinces
7. Growth in sales picks up in Quebec and New Brunswick

1   Summary

Canadian retail sales in 2008 advanced at their slowest pace since 1996, in large part as a result of lower sales at new car dealers and an overall sales decline in the fourth quarter.

Retailers sold $426.0 billion in goods and services in 2008, up 3.4% from 2007. This was lower than the growth rate of 5.8% the year before. In volume terms, total retail sales grew by 2.6%, the lowest growth rate posted for this series since 2003.

The slowdown in retail sales was mostly driven by a 4.5% decline in sales at new car dealers. Excluding new car dealers, retail sales grew 5.2% in 2008 compared to 6.4% in 2007.

Sales at gasoline stations contributed to about half of the overall increase in retail sales in 2008. This was virtually all price-driven reflecting the higher gasoline prices during the first nine months of 2008. Prices at the pump fell substantially later in the year. Other retail groups that ended the year on a downward trend after a strong start were furniture, home furnishings and computer and software stores as well as clothing and accessories stores.

Total employment for the retail industry reached 1.9 million in 2008 growing 3.2% after rising 3.9% in 2007, reflecting the similar slowing of retail sales growth. The retail industry accounted for 13.0% of total employment in 2008.

Provincially, the levelling off of retail sales in Alberta and British Columbia was responsible for most of the slowdown in retail sales growth at the national level. In terms of per capita retail spending, Alberta continued to have the highest in the country.

For the second consecutive year, Saskatchewan experienced the highest growth of retail sales among the provinces. It was one of five provinces where sales at new car dealers grew, leading to an overall increase in retail sales of 10.6%. Saskatchewan was followed by Newfoundland and Labrador (+7.6%) and Manitoba (+7.2%).

Sales gains moderated in most provinces. Only retailers in Quebec and New Brunswick posted sales increases that were higher in 2008 than they were in 2007.

This study presents a statistical profile of the retail trade industry’s performance on a province-by-province basis for 2008 using data from the Monthly Retail Trade Survey.

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2   Slowdown in retail sales growth driven by declining sales at new car dealers

Retail sales in Canada were up 3.4% in 2008 to $426.0 billion, compared with 5.8% in 2007. This was the lowest annual retail sales growth since 1996. In volume terms, total retail sales grew by 2.6%, the lowest growth rate posted for this series since 2003.

Sales declined in 4 of the 18 trade groups. The main contributor to the slowdown in retail sales growth was a 4.5% decline in sales at new car dealers, their largest annual decline since the inception of the series in 1991. Sales at new car dealers have grown by less than total retail trade since 2003. The price of new vehicles dropped by 6.9% in 2008 according to the Consumer Price Index, the sharpest price decline recorded in over half a century. In terms of unit sales, the New Motor Vehicle Sales Survey showed that unit sales of new motor vehicles fell 1.0% in 2008 as consumers and businesses steered away from trucks (-6.2%) and leaned towards the purchase of passenger cars (+4.1%). Excluding new car dealers, retail sales grew 5.2% in 2008 compared to 6.4% in 2007.

Higher sales at gasoline stations accounted for about half of overall retail sales growth in 2008. Most of the 14.6% increase reflects higher gasoline prices in the first half of 2008. Excluding sales at gasoline stations, retail sales grew by 2.0% in 2008.

The second highest growth rate was registered at home electronics and appliance stores, where sales increased 8.3%. This growth reflects higher sales volumes of commodities such as televisions, computer and telephones, as prices for these goods declined in 2008.

The only other trade group to have sales grow by more than 5.0% was general merchandisers. Its 5.8% growth rate marked the first time since 2004 that it was higher than for retail trade as a whole.

Supermarkets increased their sales 4.2% to $68.6 billion, mostly due to increases in food prices. Food prices grew 3.9%, the largest price increase since 2001.

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3   Volatile sales performance over the course of the year

The economic conditions in Canada changed substantially over the course of 2008, starting strong but weakening in the latter part of the year. Sales patterns for retail trade groups were not uniform in 2008. The value of sales at new car dealers followed a downward trend at the beginning of the year, reflecting lower prices and declining truck sales. Sales continued to fall in the latter part of 2008 as sales of passenger cars began to decline.

Higher gasoline prices led to a peak in sales at gasoline stations in July followed by declines in subsequent months as prices dropped sharply. Furniture, home furnishings and computer and software stores also saw their sales increase until July and fall thereafter. Sales at clothing and accessories stores began to decline in June as the economy slowed.

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4   Employment growth in the retail sector mirrors retail sales growth in 2008

Total employment for the retail industry reached 1.9 million in 2008 growing 3.2% in 2008 after rising 3.9% in 2007, reflecting the similar slowing of retail sales growth. The retail industry accounted for 13.0% of total employment ¹  in 2008.

Only two retail trade groups experienced significant acceleration in employment in 2008: food and beverage stores and electronics and appliance stores.

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5   Sales level off in Alberta and British Columbia

Retail sales in Alberta and British Columbia continued to plateau for most of 2008 then dropped in the last quarter, contributing to most of the overall lower growth rate.

Alberta was the only province that showed a decline in retail sales in 2008. This province went from ranking first place in retail sales growth in 2006, to second place in 2007 and to last place in 2008.

After four years of strong economic growth and consumer and business spending increases, retail sales in Alberta edged down 0.1% to $61.1 billion in 2008, the first annual sales decline for this province since the start of this series in 1991.

The main reason for this decline was a 12.4% decline in sales at new car dealers. According to the New Motor Vehicle Sales Survey, the percentage drop in the number of new motor vehicles sold in the province was the most pronounced since 1992.

After growing at an average rate of nearly 15% over the previous seven years, sales at building and outdoor home supplies stores in Alberta declined 2.8%. This reflects the 39.7% decline in housing starts in this province in 2008.

Alberta continued to have the highest per capita retail spending in 2008 among the provinces, with each Albertan spending about $17,000 in retail stores.

British Columbia was the only other province that had sales growth lower than the national rate. At 0.3%, it was the lowest growth rate registered in British Columbia in a decade. As in Alberta, the main reason for the lower growth rate in retail sales in the province was a 10.9% decrease of sales at new car dealers. The number of new motor vehicles sold was at its lowest level since 2004 according to the New Motor Vehicle Sales Survey.

Aside from Alberta and British Columbia, all other provinces registered growth rates above the national average.

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6   Although slowing, sales growth in Saskatchewan leads the provinces

For the second year in a row, the province with the highest growth in retail sales was Saskatchewan. Sales increased by 10.6%, with growth exceeding 10% in six of the eight sectors. Aside from mainly price-driven higher sales at gasoline stations, the main contributors to growth in this province were sales at general merchandise stores and new car dealers.

The province’s retail trade sector benefited from the continued resource boom in the province for the majority of 2008, which resulted in rising income and population growth. Average weekly earnings in the province increased 4.8% in 2008 according to the Survey of Employment, Payroll and Hours, while population growth was 1.6%. Saskatchewan accounted for 3.4% of total retail sales but contributed almost 10% to total retail sales growth.

Another province where retailers benefited within the context of a resource boom and population growth was Newfoundland and Labrador. The year 2008 marked the first time since 1992 that population growth in this province was positive. Retail sales continued their strong growth of the previous year rising 7.6% to $7.1 billion. This is, in part, a reflection of the 4.1% increase in the average weekly earnings in the province.

Sales in the building and outdoor home supplies stores sector and the furniture, home furnishings and electronics stores sector posted the strongest growth in the province, with the former being among the highest contributors to growth. Because items sold in these types of stores are often purchased by owners of new homes, this strong growth can be partially explained by the 23.1% increase in housing starts seen in Newfoundland and Labrador in 2008.

As the economy slowed in the last quarter of 2008, retail sales in both Saskatchewan and Newfoundland and Labrador fell along with the other provinces.

In Manitoba, increases in employment and population growth contributed to the continued strength of retailing activity. The year 2008 marked the first time since 1984 that population growth surpassed 1% in this province.

Manitoba witnessed its second best retail sales growth of the last ten years; sales were up 7.2% to just over $15 billion in 2008. While sales at new car dealers were down 2.4%, increases in furniture, home furnishings and electronics stores and building and outdoor home supplies stores were major contributors to growth in this province.

In Ontario, retail sales increased at a faster pace than the national average for the first time since 2000. Ontario retailers increased sales 3.5% to $151.4 billion. General merchandise stores led the growth in the province posting gains of 5.2%.

For the second consecutive year, retail sales in Prince Edward Island outpaced the national average by growing 5.6% to $1.7 billion. The furniture, home furnishings and electronics sector, which grew at a rate of 10.6% in the province, was among the highest contributors to growth in this province.

Nova Scotia's retail sales increased 4.2% to $12.1 billion in 2008. The year 2008 marked the first time since 1999 that sales in Nova Scotia outpaced the national average. A major contributing factor was the 8.2% gain in sales at furniture, home furnishings and electronics stores.

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7   Growth in sales picks up in Quebec and New Brunswick

Retailers in Quebec sold $95.3 billion of goods and services, an increase of 5.1%. Quebec is one of only two provinces where sales growth was stronger in 2008 than in 2007. This province contributed to about a third of the growth in total retail sales in Canada. Widespread gains in all retail store sectors were responsible for the sales growth in this province.

Retail sales in New Brunswick increased 5.9% to $9.9 billion. Aside from Quebec, New Brunswick was the only other province where sales growth in 2008 surpassed growth in 2007. The 1.6% growth rate for new car dealers in this province was the third highest in the country.