"2022 Canadian Retail Report": This category has the best performance

It is learned that according to Canadian retail sales data tracked by the NPD Group, Canadian retail sales growth slowed down in 2022, with only a flat increase of 12%, but overall retail spending was still 7% higher than the pre-epidemic level in 2019.

Over the past two years, Canadian retail sales growth has been driven primarily by increases in average selling prices (ASPs). In 2022, ASPs increased 5% year-over-year, while sales volumes were 5% lower than in 2021 and 6% lower than in 2019.

Inventory of Canada's retail market in 2022

According to Tamara Szame, Canadian retail industry consultant at NPD Group, retail spending increased rapidly in the first quarter of 2022 as contact restrictions were lifted across the country and consumers returned to their pre-pandemic daily lives.

The second quarter of 2021 followed closely behind, with year-over-year growth of 5%. April was the strongest month for Canadian retail sales in 2022 as the weather turned and travel, employees returned to the office, and celebrations began to increase.

However, demand growth lasted only two quarters. Starting in the third quarter, rising inflation and other macroeconomic pressures began to affect consumer spending levels and even affected back-to-school sales.

Data showed that Canadian retail sales fell 1% in the third quarter. The fourth quarter continued the downward trend that began in late summer and became the weakest quarter of the year. Total retail sales fell 5% between October and January as consumer spending declined.

High-end beauty becomes one of the best performing industries in 2022

Despite a slowdown in retail sales in the fourth quarter, almost all sectors except apparel achieved growth in 2022. Cosmetics, suits, dresses, fashion shoes and sandals, and portable speakers all topped the list of Canada's best-performing categories in 2022.

In line with sales trends in the U.S., Canada’s prestige beauty industry ended 2022 as one of the country’s best performing sectors, according to data from The NPD Group. Full-year sales reached $3.4 billion, up 25% compared to 2021.

The makeup category returned strongly, with sales revenue increasing by 38% year-on-year, the fastest growth among all high-end beauty categories; perfume sales increased by 24%; skin care sales increased by 17%; and hair care products continued to show strong growth of 27%. As overall market prices continued to rise, the average price of beauty products increased by 1%, including promotional activities.

The fastest growing segment is the Eau de Toilette category. Together, Eau de Toilette, hair care products and foundations are expected to contribute nearly 25% of the total sales revenue growth of the beauty industry in 2022. When purchasing cosmetics, Canadians focus on skin tone, and luminous and natural foundations are the products with the largest share growth in the cosmetics category.

At the channel level, online sales continued to grow year-on-year in 2022, but physical store sales are the top priority. The trend of Canadians returning to in-store shopping is obvious, with in-store sales increasing by 34%, accounting for the majority of the industry's gains last year.

Looking ahead to 2023, NPD Canada beauty industry analysts noted that the Canadian beauty market is expected to see another year of growth in 2023, driven by increased demand, product innovation and experiential retail.