The trend: Consumers in Canada are taking a cautious approach to holiday shopping.

• 36% are cutting back holiday spending, up 4 percentage points from last year, per TD. Among those scaling back, 60% say groceries and household essentials will account for at least half of their holiday spending.
• Those results dovetail with a Bank of Montreal poll that found 41% are reducing holiday spending, while 39% expect to spend the same amount but buy fewer items because of inflation.

Why it's happening: A challenging Canadian economy is creating stiff headwinds for consumers and retailers.

• 61% of consumers have adjusted their holiday shopping plans due to tariff concerns, and 25% started shopping earlier to avoid potential price increases.
• A separate survey by insolvency trustee Harris & Partners found about 60% of respondents don’t feel financially prepared for Christmas, and just over 70% aim to spend less than last year.

The caveat: Plans and actions do not always align; 77% of Canadian consumers say they are vulnerable to overspending because of limited-time promotions, pressure to give meaningful gifts, or a desire to make the holidays magical for their kids, per TD. In fact, a Deloitte report expects holiday spending among Canadian consumers to edge up nearly 3% this year from 2024.

Implications for retailers: The Canadian retail landscape entered the holiday season with little momentum. Retail sales were flat in October after a 0.7% drop in September, per Statistics Canada. With a softening labor market and US tariffs adding extra strain, there is little to suggest sales will meaningfully pick up in the final months of the year.

To prompt cost-conscious shoppers to open their wallets, retailers need to pull many of the same levers that their US neighbors have deployed: leaning into value-focused messaging, offering compelling deals, and relying on loyalty programs to keep consumers coming back.