As we near the end of 2021 (nearly two years since the COVID-19 pandemic began), life is slowly returning to normal in Canada. And while we are a long way from pre-pandemic life, most of us are grateful for some of the small joys the new normal entails ― whether that means being able to gather with small groups of family and friends, taking the family out to a local restaurant for dinner, or picking kids up from school now that in-person learning has resumed. As a society, we are recovering. There likely will be bumps along the way, but it seems reasonable to assume the worst is now behind us.
When it comes to our retail environment, it’s safe to say recovery is well in hand. This was a unique year for retail in our country; Canada was one of only a few countries that went into a third COVID-19 peak requiring additional lockdowns, closures, and stay-at-home orders. This put our recovery on hold and suppressed some of the pent-up demand felt South of our border. In Canada, we began our slow growth ascent in June 2021. Since then, Canadian retail had grown 12% year to date over 2020, and 4% over 2019.
In the latest quarter (Q3 2021), retail sales grew by 8% over 2020 and 7% over 2019, adding over $1 billion to overall retail spend in 2021. Additionally, in Q3 we started to see a shift in industry dynamics. Challenged industries, such as apparel, beauty, and footwear, rebounded to growth while consumer technology softened, unable to comp record-breaking 2020 growth. Home-focused industries, such as housewares and appliances, continued to grow, though it shifted from double digits in 2020 to single digits in Q3 2021.
In Canada, retail recovery depends on the most important industry, apparel, which leads all other retail industries in terms of market size, volume, and revenue. The apparel industry has shown some signs of recovery, driving 20% of Q3 retail growth over 2020, but it remained $17 million below Q3 2019 levels. Consumer technology, the second most important industry in terms of contribution, was responsible for driving a significant amount of growth over Q3 2019; volume in the industry was almost half a billion dollars above 2019, despite the recent softness.
Our first look at the data shows Q4 2021 started off soft, despite the early start to holiday shopping. Almost a quarter of Canadians had already started their holiday shopping in the first few weeks of October. Softness could also be attributed to an increase in buying gift cards. A recent survey we conducted revealed over half of Canadians anticipated buying gift cards this holiday season.
Another 25% of Canadians anticipated starting their holiday shopping on Black Friday/Cyber Monday. Only 3% said they would leave their holiday shopping to mid- or late December. In fact, over 28% of Canadians reported they started their holiday shopping earlier in the season than they normally would. The top reasons for shopping earlier included buying due to promotion and fear of delays and closures due to the pandemic.
The top categories consumers planned to buy this holiday season included gift cards, clothing, toys, food and beverage products, beauty products, and footwear. It’s worth noting that clothing, beauty, and footwear collectively need to increase sales more than 30% in Q4 to recover to 2019 levels.
It appears retail will finish 2021 strong ― almost all industries entered Q4 above 2020 volumes. Here’s to a bright holiday season as we reemerge and gather with friends and family in a landscape that feels recognizable again.