Retail sales bounced back 18% in May but are still 20% below where they were before COVID-19

Canadian retailers bounced back from COVID-19 in a big way in May, with sales up almost $42 billion or 18.7 per cent from April's record low.

Statistics Canada reported Tuesday that sales in 10 of the 11 sub-sectors the data agency tracks were higher during the month, as large parts of the economy started to reopen after being completely shut in March and April due to the pandemic.

The only type of store that didn't see sales increase in May was grocery stores, because business was booming in that industry since the early days of the pandemic. Grocery store sales slipped two per cent from April's level. Every other type of store saw higher sales.

Sales of cars and car parts increased for the first time in three months, clocking in with a 66 per cent increase in sales during the month.

Other stores fared even better, such as clothing stores (up 92 per cent) sporting goods, hobby, books and music (up 101 per cent) and furniture and home furnishings (up 58.6 per cent). Sales at gas stations were also 17 per cent higher than in April.

Sales were also up in every province, despite much of Canada's most populous province remaining closed through a good part of the month. 

Quebec, Manitoba and the Maritime provinces led the way with higher-than-average increases, while Ontario was the laggard at 14.2 per cent, likely because the province was slower to reopen than most others.

It was another good month for online sales, too, as the pandemic seems to have accelerated the shift towards consumers buying more and more goods online and having them delivered.

Online shopping surging

Online sales came in at $3.8 billion in May, an increase of 112 per cent from last May's level. And that figure doesn't include sales at online-only U.S. stores such as Amazon, since StatsCan tracks that spending somewhere else.

Online shopping now makes up eight per cent of everything sold in Canada, the data agency calculates.

Store owner Jenna Lam is one retailer who's part of that trend. The owner of Early Bird & Worm, a children's store in Toronto built up her e-commerce business basically overnight when the pandemic forced her to close her doors in March.

"We quickly had to pivot and really boost our online marketing and try to rally," she said in an interview with CBC News.

She said it started small but slowly grew over time. "We were trying to make any sale possible by phone, by email by in any way.

"We're still down. But the increase month to month, makes it very promising," Lam said.

While May's surge was encouraging, it was not in fact as big as the 20 per cent bounceback that economists were expecting. Preliminary data suggests an even bigger rebound is in the pipeline for June, as figures indicate sales were up by another 24.5 per cent, StatsCan said.

"Retail sales are rebounding strongly boosted by pent-up demand and as government income support measures provide a lift to household spending," Bank of Montreal economist Benjamin Reitzes said. "While it looks as though retail activity returned close to pre-COVID levels in June, expect the broader economy to experience a longer, more drawn out recovery as the pandemic continues to weigh on a number of sectors."

Economist Ksenia Bushmeneva at TD Bank said the sales rebound in May is obviously encouraging, but it's too early to suggest that Canada's hard-hit retail sector is out of the woods. Like every other part of society, retailers will live and die based on what happens with the ongoing pandemic.

"The outlook for retail sales depends on the virus trajectory," she said. "As greater swaths of the economy reopen, this is bringing reprieve to retailers and shoppers, but it also carries risks that increased social interaction will lead to a resurgence in cases and renewed restrictions."