A new consumer survey from investment firm Stifel reveals a notable dip in Canadian consumer confidence heading into the second quarter of 2025. According to the report, titled Canadian Spending Intentions Soften in April Impacted by Trade Tensions, only 50% of Canadians say they intend to increase discretionary spending over the next 12 months — a drop of 600 basis points compared to January 2025.
“This is the first contractionary reading we’ve seen in over a year,” the report notes, suggesting that Canadian consumers may be entering a more cautious spending phase. The decline was evident across all age groups and income levels, signalling broad-based economic apprehension.
Ontario was the only region where a majority of respondents (55%) still planned to increase discretionary spending, while Quebec saw the sharpest reversal with a decline of 2,200 basis points.
Pet Industry Emerges as a Standout
One category bucking the broader slowdown is pet care. Spending intentions for pet food and accessories climbed five percentage points to reach 76% — the highest level seen in the past eight quarterly surveys.
The surge was led by strong sentiment in Ontario, where intentions rose 1,400 basis points to 74%. Pet Valu, which over-indexes in Ontario and among higher-income households, stands to benefit from the trend. In fact, 75% of respondents earning over $75,000 indicated they expect to spend more on their pets in the coming year.
“We continue to see pet spending as resilient, likely tied to the emotional connection people have with their animals,” the analysts said, describing this segment as a “defensive category” within discretionary retail.
Stifel also measured aided brand awareness in the pet category and found that while 48% of respondents were familiar with Pet Valu, combining its other banners (Bosley’s and Chico) raised awareness to 72% — placing it ahead of PetSmart at 67%.
Clothing and Apparel Face Decline, With Exceptions
The apparel sector was not as fortunate. Just 48% of Canadians surveyed plan to spend more on clothing and apparel, marking the lowest figure in five quarters and falling into what the report characterizes as “contractionary territory.”
The trend was evident among young shoppers, high-income consumers, and women — typically core audiences for brands like Aritzia and Groupe Dynamite. While these drops were smaller in magnitude (ranging from 50 to 200 bps), they reflect a cooling trend in discretionary fashion.
However, there were some bright spots. Groupe Dynamite saw a notable jump in brand-specific purchase intent among female shoppers. The Garage brand rose to 27% from 16% in January 2024, while Dynamite climbed to 24% from 10%. In contrast, Aritzia fell from 25% to 21%, and H&M saw the sharpest retreat, dropping from 63% to 53%.
Fast-fashion juggernaut Shein continued to gain share, with 44% of female respondents indicating they plan to shop there — up 400 bps from the previous year.
Dollar Stores Hold Ground — But Watch Low-Income Shoppers
Overall spending intentions at dollar stores remained high, with 74% of respondents saying they would increase spending in this channel, holding steady from January 2025.
Yet beneath the surface, a divergence is emerging. Among those earning less than $75,000 annually — a key customer segment for dollar stores — spending intention dropped by 650 basis points to 71%, its lowest in four quarters.
Conversely, higher-income consumers are increasing their use of value retailers. Eighty percent of respondents earning above $75,000 said they intend to increase their spending at dollar stores, up sharply by 1,100 basis points.
Regionally, Ontario again led the pack with 79% of respondents indicating increased interest in value shopping, while Quebec lagged at 68%.
“These trends could indicate an evolving demographic for discount retail,” the report suggests, “with higher-income households playing a greater role in dollar channel growth.”
Furniture and Appliance Spending Remains Steady
The furniture and appliances category held up relatively well, with 56% of respondents indicating they plan to make a purchase in the coming year. This represents a modest 100 basis point increase over the previous quarter, and a more robust 200 basis point increase in the number of people “very likely” to buy.
This improvement was strongest among younger respondents aged 18 to 54 and those earning under $75,000 — demographics that reported sequential gains of approximately 500 basis points.
Leon’s Furniture, which appeals to value-conscious and first-time home furnishing buyers, may see upside from this trend. However, interest among higher-income earners declined to 61%, down 400 basis points, possibly reflecting pullbacks in big-ticket discretionary categories.
Toys Show Resilience Despite Minor Dip
Intentions to spend on toys remained in expansionary territory, with 57% of respondents saying they plan to increase spending — a small dip from 59% in January.
The strongest demand came from parents aged 18 to 54, with 63% planning to spend more. This is good news for toy manufacturer Spin Master, as it suggests consistent consumer engagement with children’s products.
Interestingly, while overall intentions among lower-income consumers increased to 61% (a 300 bps improvement), those earning above $75,000 showed a marked decline, with only 51% expecting to spend more on toys — a 900 bps drop.
Powersports Interest Increases Among Budget Consumers
An unexpected bright spot came from the powersports sector. Just under 10% of Canadians said they are “very likely” to purchase or upgrade a powersports vehicle in the next year — up 300 basis points from January and reaching the highest level in the past 14 quarterly surveys.
The rise was driven primarily by male and lower-income respondents. In contrast, interest declined among higher-income consumers (down 400 bps), creating an ambiguous picture for manufacturers like BRP.
“Whether lower-income enthusiasm can offset high-income hesitancy remains to be seen,” the report notes.
Air Travel Demand Faces Crosswinds
Canadian consumers appear to be growing more hesitant about air travel. Only 55% said they were likely or very likely to fly for their next vacation, down from 60% in January.
The decline in intent was consistent across income brackets, suggesting a more general sentiment of restraint. There also appears to be rising price sensitivity: more respondents reported that airfare prices influenced their decision not to travel, with those citing airfare as a prohibitive factor increasing by 400 basis points.
This could spell trouble for airlines like Air Canada as they navigate rising costs and evolving consumer behaviour. The trend will be important to watch through the upcoming summer travel season.
Retailers Face Mixed Conditions Ahead
Stifel’s survey paints a mixed picture for Canadian retailers in Q2 2025. While categories like pet care and discount retail remain strong — with solid upside for names such as Pet Valu, Dollarama, Leon’s, and Spin Master — other sectors are seeing stress.
Apparel retailers are facing both cyclical challenges and increased competition from fast fashion and digital players. Brands such as Aritzia and Groupe Dynamite will need to navigate shifting demographics and geographic trends to maintain growth.
Meanwhile, interest in air travel and big-ticket goods from higher-income consumers has softened, indicating broader macroeconomic caution, potentially stemming from ongoing trade tensions, inflation concerns, and broader global uncertainty.
As the report notes, these consumer sentiment shifts tend to precede financial performance, and retailers would do well to monitor these signals as they plan for the months ahead.
