The impact of the COVID-19 pandemic on all industries is significant, however, restaurants, quick-service food and beverage and retail sectors were especially hard hit. Part one of this analysis looked at the impact of COVID-19 on population growth, employment and the overall economy as measured by the GDP to understand the extent to which Canadians and population subgroups were initially affected by the pandemic in 2020. This post will discuss what happened to the retail and restaurant sectors—how they are faring today—and how data and analytics can provide actionable insight to support the path forward.
Overall consumer expenditures in 2020 were down, and where, when and how people shopped changed. For some Canadians, employment was lost, and for others, the workplace shifted from the office to home. Shopping venues changed from downtown to suburban locations, and there was a dramatic increase in online shopping. The impact of various shutdown procedures for retailers had different results depending on the type of store and the commodities being sold. We saw a significant increase for some commodities such as home renovations and recreational vehicles and increases for in-home meals and grocery purchases. What is evident is that consumers adjusted their shopping habits to purchase items at open stores.
During 2020, various provinces allowed businesses to partially re-open under multiple conditions that regularly restricted the number of shoppers and required physical distancing measures. Retailers also started or expanded their online presence and curbside pick-up services in response to the closures. In April 2020, retail sales were down by 32% compared to February. Beginning in May, total retail sales rebounded, and by June, sales were back to February levels. Sales continued to increase until November before declining in December when many provinces re-introduced shopping restrictions.
In December, total retail sales were 2.1% higher than in February on a seasonally adjusted basis. The increased use of e-commerce was partly responsible for the rebound in sales. Between February and December 2020, retail e-commerce nearly tripled to account for 8.3% of total retail sales. In-store sales had also recovered to pre-pandemic levels.
Table 1 summarizes retail sales in various types of stores in February 2020 and the changes as of April, June and December of 2020. The difference in sales between February and April varied widely. Grocery and liquor stores both had increased sales. Stores deemed essential such as health, personal care and general merchandise stores had modest declines of 10%-15%. Electronic and appliance stores and building material and garden equipment stores had high e-commerce sales and saw similar decreases of 10%-15%. However, most other stores selling only non-essential commodities had much larger sales drops of 50%-85%.
By June 2020, sales had rebounded for most stores, and sales continued to rise for most of the year. By December, sales were above February levels for all groups except automobile dealers, gasoline stations, clothing and accessory stores. For automobile dealers, the overall category was down 4%, however, new car dealers were down 5%, while used car dealers were up 8%. “Other” types of dealers were up 45% due to a surge in demand for recreational vehicles.
Sales in restaurants and bars were particularly hard hit by the pandemic and slow to recover due to the various dining restrictions. Table 2 summarizes the results.
By April 2020, sales had dropped by 61% from the February level. A slow increase leading up to September, followed by a slow decrease to December left sales back to June levels, 35% down from February. Full-service restaurants, bars and special food services that include cafeterias, catering and food truck sales were the hardest hit and were still down by more than 50% compared to February. Sales in limited-service restaurants such as Tim Horton’s were down only 12% in December compared with February.
A recent survey carried out for the Association of Canadians Studies shows the diversity in Canadians’ attitudes to getting back to various activities. The survey asked, “Once the governments lift the protective measures put in place to fight COVID-19, which of the following would you be comfortable doing?”
For some activities, such as attending bars, airplane travel, going to the United States or attending large concerts or sporting events, only 30%-40% indicated they would be comfortable.
For other activities, such as dining in restaurants, going back to work, going to the gym or shopping in malls, the comfort level was 65%-75%.
We see from the earlier analysis that physical distancing guidelines and fluctuating restrictions related to shopping and dining-out led to shifts in consumer preferences and behaviours.
The key question for businesses and marketers alike is, “What consumer changes are likely to be permanent and who may revert to pre-pandemic behaviour?”
Environics Analytics has developed a range of new products to help understand the diversity of Canadian households and provide businesses and organizations with access to current information to inform their recovery efforts.
Data that can assist on the road to recovery:
Questions? Get in touch to learn more about how our data can help retailers and restaurants understand their customers and markets.
This is part two of a two-part report and focuses on the impact and implications of COVID-19 to retailers, restaurants and food and beverage establishments. Part one focuses on the impact COVID-19 has had on Canadian population growth, employment levels and the overall economy as measured by GDP.
Doug Norris is a Senior Vice President and Chief Demographer at Environics Analytics.
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