Retail Sales in Canada: Benchmarks

Statistics Canada recently announced that Canadians spent about $66,000,000,000 at retail stores in July. What does that mean? One of the challenges with studying economics is that people quote numbers even if the audience has trouble with the context. This lack of context is especially evident in media reports which shift between related-but-different measures (e.g., total number of dollars spent in a month vs. number of shirts sold in a year vs. future fashions or innovations) confusingly. This note offers some useful benchmarks.

66 billion dollars per month is about $800 billion per year (i.e., 66 × 12= 792) and about $1650 per person per month (66 billion/40 million= 1650).

Statistics Canada’s numbers are seasonally adjusted, to improve the quality of month-to-month comparisons. These numbers do not account for inflation or changes in prices charged. Statistics Canada  publishes information to help you determine whether the 0.9 percent increase in the dollar value of sales (compared to June) is mostly due to price increases or due to consumers buying more: in addition to the more popular Consumer Price Index, Statistics Canada also publishes a Retail Service Price Index and a Wholesale Service Price Index. 

Digging into the data deeper identifies assumptions that people use without questioning. For example, given all of the media coverage of Amazon and Shopify or of the apparent expansion of home delivery during Covid, is classic bricks-and-mortar retail dead? Compared to $66b in traditional retail sales per month, how big is e-commerce in Canada: less than $33b, between $33b and $66b, between $66b and $99b or more than $99b per month?

The real answer is $4b (i.e., about 6 percent of retail sales).

Similarly, aggregate numbers may seem personally irrelevant. Any one retailer has a very small share of the aggregate. Even a very large Canadian retailer, such as Canadian Tire which also owns Mark’s Work Wearhouse and SportChek and had revenue of $16.7B during 2023 (p. 91), represents a small fraction of the total. Any one retailer will be very happy to increase their share of a consumer’s wallet by even 1 percent. In other words and regardless of the fraction of consumers who claim to be loyal customers, retail markets are very competitive on the margin. That perspective affects both the pricing strategies and the incentive for a new entrant to offer something new.

Statistics Canada provides a breakdown of the retail spending, if you want to focus on “Motor vehicle and parts dealers”, “Supermarkets and other grocery retailers” or “Clothing and clothing accessories retailers”. Other sources provide data on sales of specific products, such as bottled water.

These extra numbers start to give a context, such as what Canadian Tire worries about when competing with Home Depot or a seasonal supplier or what effect an increase in the minimum wage might have on aggregate retail sales. Because context is more personal than a big number such as $66 billion, you should find it useful when applying the margins or opportunity cost principles.

Now, it is your turn to write.

1. Do you have any hypotheses which would explain provincial differences in spending patterns, either in total or by type of retailer?
2. This post discussed retail sales in Canada. Retail is one part of the Service sector. How much bigger is the Service Sector?
3. Pick your favourite product and estimate its quantity demanded per year using the Fermi Method. Rather than searching for a specific number online, applying this Method develops your intuition by finding a rough answer using information that you think that you already know. For advice on how to apply the method go to [1] or [2]. After finding your estimate, see what answers are provided by popular sources of Artificial Intelligence. You may be surprised at how bad their answers are.