MNI REALITY CHECK: Canada Aug Retails Seen Up Before 2nd Wave

Canadian retail sales will likely weaken after a decent August gain as new Covid-19 restrictions discourage driving trips and dining out, industry officials told MNI.

Sales may gain another 1.1% in August after returning to pre-pandemic levels in July, according to economists surveyed by MNI.

Key points from industry leaders ahead of the report due Wednesday 8:30 am from Ottawa:

Chris Elliott, Senior Economist at Restaurants Canada:

Sales are poised to fall even further below July levels that were already 27% below the pre-Covid mark. Bars and nightclub sales are 50% below, and winter weather will be another problem to outdoor dining beyond the rising coronavirus case load.

"Lots of restaurants are going towards delivering side, and they are paying 30% or more to the third-party aggregators" he said. Owners may double price increases to 4% next year to keep profit margins, he said.

"It wasn't going to be until 2022 until we see food service sales generally get back to the pre-Covid level for quick-service restaurants, but for bars and pubs it might take a bit longer."

George Iny, Director of Automobile Protection Association:

"Initially manufacturers had strong rebates in June and July, but now it is normal and prices are a bit higher because dealers don't have to discount as much, because of the tight supply."

In case of the second wave, the government may be less restrictive on auto dealers so "we do not see a collapse," he said.

There are signs that people who kept their jobs and feel secure about them have more disposable income lately by cutting back on other expenditures. Some have been putting that into higher-end cars, he said, warning that may not last if working from home diminishes the need for commuting.

"If the public permanently shifts to working from home, they will need their car less and they will need their home more, which means they are going to spend more on their homes and less on transportation. It is possible but we haven't seen it," he said.

Home Hardware Stores spokesperson Cassie Martin:

The chain has seen "high growth in essential items such as disinfectants, cleaners and hand sanitizers. The same is true for preserving items such as jars and lids."

"We anticipate consumers will continue to focus on home improvement projects well into 2021."