As part of Retail Insider Reports, this Q3 2026 Consumer Behaviour / Retail Economy Report analyzes Q3 2026 developments in Canadian consumer spending, purchasing behaviour, and the retail economy. Drawing on Retail Insider coverage, industry research, government data, and broader market signals, it identifies key dynamics shaping households, retailers, landlords, and consumer-facing businesses. These reports are designed to deliver executive-level insights across major retail sectors and can be accessed through the Retail Insider Report Hub.
This report examines changes in Canadian consumer behaviour, including shopping habits, spending priorities, demographics, loyalty, purchasing decisions, and evolving customer expectations; and macroeconomic conditions affecting Canadian retail, including retail sales, inflation, employment, consumer confidence, interest rates, tariffs, trade, and other economic indicators.
Report Contents
Executive Summary
Canadian consumers continued spending through Q3 2026, but aggregate resilience concealed substantial differences in financial circumstances and purchasing behaviour.
Statistics Canada reported July retail sales of $73.7 billion, down 0.7% from June but 5.1% higher than a year earlier. Retail sales volumes were up a more modest 1.7% year-over-year, illustrating the difference between growth in dollars spent and growth in the amount of merchandise consumers were buying.
More recent indicators suggested spending strengthened again in August. Statistics Canada’s advance estimate pointed to a 1.3% increase in retail sales, while RBC cardholder data showed spending growth broadening across discretionary goods and services.
Those figures coexisted with substantial household financial pressure. Surveys conducted during and immediately before the quarter found consumers using more credit for essentials and drawing on savings for everyday expenses, with younger households and families with children reporting considerably greater pressure than older consumers and households without children.
Value seeking remained widespread, but its meaning varied. Some consumers prioritized lower prices, promotions and private-label products. Others continued spending on quality, convenience, service and discretionary experiences.
For retailers, retaining a customer does not necessarily mean retaining every purchase. Canadian consumer spending remained resilient through an uneven Q3, while household financial pressure produced greater differences in how consumers allocated their money.
Several patterns emerged:
- Retail sales remained higher than a year earlier, although growth in sales volumes was considerably lower than growth in dollar sales.
- Financial pressure was concentrated among particular households, especially younger consumers and families with children.
- Value seeking remained widespread without producing a universal shift toward discount retailers.
- Consumers adjusted purchases through promotions, private label, product substitution and price comparison without necessarily abandoning their preferred retailer.
- Physical stores remained important, particularly when consumers wanted immediate product availability.
- Spending patterns varied significantly by category, income and shopping mission.
For retailers and landlords, topline sales provide only part of the picture. Transactions, units, basket composition, customer mix and repeat purchasing can reveal changes in demand that revenue alone may obscure.
Retail Insider Coverage
Household Financial Pressure Is Increasingly Uneven
Aggregate spending provides limited insight into the financial position of individual Canadian households. The MNP Consumer Debt Index released in July found that 61% of respondents had at least half of their income committed before receiving it. Some 46% said they were $200 or less away from being unable to meet monthly bills and debt obligations, up three percentage points from the previous quarter. At the same time, the overall index improved four points to 91. Confidence improved even as many households retained little room for unexpected expenses.
Equifax’s August survey showed how uneven that pressure had become. Among 1,532 respondents, 29% said they were using more credit than a year earlier for groceries, utilities and other essentials, while 23% were drawing on savings for everyday costs.
Families with children reported considerably greater pressure. Forty-two per cent said they were using more credit for essentials, compared with 24% among households without children. Thirty-six per cent of respondents under 55 reported greater credit use for essentials, compared with 18% among consumers aged 55 and older.
Yet 56% of all respondents expected to pay their credit-card balances in full each month, reinforcing the divide between financially constrained households and consumers retaining greater spending capacity.
Consumer insolvencies provide a more severe measure of financial stress. Office of the Superintendent of Bankruptcy figures reported during the quarter showed 37,523 consumer insolvencies during Q2, up 6.9% from a year earlier and the highest quarterly count since 2009. The figure was not a population-adjusted record, and the 2025 annual insolvency rate remained below its 2024 level.
Some households are relying more heavily on credit or savings to meet ordinary expenses, while others retain considerable financial flexibility.
Value Doesn’t Simply Mean Cheap
Financial pressure has made value an important consideration across income groups, but its meaning varies considerably. “Value is the number one factor for every income group as everyone is value-seeking right now,” BCG’s Terence Smith told Retail Insider. For one customer, value may mean the lowest available price. Another may place greater weight on quality, durability, installation, service or convenience.
BCG’s research showed significant differences in spending by category and income. Higher-income households spent two to four times as much as lower-income households in some major categories, while spending on household appliances was more evenly distributed. Pet care, despite its reputation as a dependable everyday category, leaned more heavily toward higher-income consumers willing to pay for premium products.
BCG’s six-month spending intentions showed weaker dining participation among lower-income households, while higher-income demand held up better. Automotive and beauty intentions were improving across income groups, with higher earners moving faster.
A Stifel survey of 300 Canadian adults provided a counterpoint to an exclusively cautious consumer narrative. It found that 57% expected to increase discretionary spending over the following year, up from 52% in April. Dollar-store spending intentions were particularly strong at 75%, while apparel intentions improved and furniture weakened.
Consumers may spend more while becoming more demanding about value. For retailers, price architecture, product quality, pack sizes, promotions and service need to reflect the customers actually buying within a category. Broad discounting may increase transactions without necessarily improving the economics of the customer relationship.
Retailers Can Keep the Customer and Lose the Basket
Grocery shopping provides one of the clearest examples of how consumer selectivity can change purchasing behaviour without producing an obvious change in retailer loyalty.
Milesopedia research reported during the quarter found that 71.1% of respondents were comparing prices more frequently and 39.1% were buying more private-label products. Only 9.6% said they had changed their preferred retailer. The study was small and heavily concentrated in Quebec. Its 203 respondents were recruited through a newsletter and Facebook community, approximately 83% were in Quebec, and participants were particularly familiar with loyalty programs. The results should not be treated as a national measure of retailer switching. The behaviour it describes is nevertheless useful. Shoppers may remain regular customers while buying more private label, waiting for promotions, substituting products, reducing discretionary additions or purchasing selected categories elsewhere.
Canadian grocery operators reported different outcomes during the quarter. Loblaw said food traffic and basket growth remained positive in its second-quarter results, with hard-discount comparable sales close to 4%. Management continued to describe customers as focused on value.
Empire’s September results call presented a different picture. Management said its full-service business was gaining share while discount was holding share and described consumer behaviour and promotional intensity as broadly stable.
The evidence supports continued demand for affordability without establishing a universal migration from conventional supermarkets to discount. Customer retention may therefore remain stable while the composition and profitability of the basket changes underneath it.
Shopping Mission Can Matter as Much as Channel
The purpose of a shopping trip can be as important as the channel a customer uses. Research from the Retail Council of Canada and Leger examined task-driven, inspiration-led and problem-solving shopping journeys using a survey of 2,014 Canadian shoppers and follow-up focus groups. The same consumer behaved differently depending on what they were trying to accomplish.
Physical retail remained prominent across those journeys. In-store browsing was used by 66% of respondents during research, while 58% ultimately completed their purchase in a store. Among task-driven shoppers, 70% purchased in-store and 71% took the product home the same day.
Immediate availability remains one of physical retail’s clearest advantages. Thirty per cent of respondents had encountered an out-of-stock item or limited availability, while 37% said they switch retailers when an item is unavailable.
Inventory accuracy, accessible staff and dependable fulfilment can determine who captures an individual transaction. A retailer may also contribute to discovery or product evaluation even when the eventual transaction occurs through another channel, making channel-specific attribution an incomplete measure of the store’s contribution.
Discovery Becomes More Fragmented
Artificial intelligence is adding another layer to the shopping journey, although its current role remains relatively small. The RCC and Leger research found that 11% of respondents had used AI during shopping research, while just 1% began their journey there.
Separate Retail Insider reporting on AI discovery research described consumers using AI tools to ask questions around a situation, intended use or problem instead of beginning with a specific product. That behaviour increases the importance of accurate product specifications, sizing, availability information and credible reviews across retailers’ digital channels.
Different studies currently define AI shopping adoption differently, making it premature to combine individual findings into a single growth measure. For now, AI is an additional discovery channel within an already fragmented customer journey.
Broader Industry Coverage
Category Performance Shows Why Averages Mislead
Statistics Canada’s July retail data demonstrated how differently categories can perform within the same consumer economy. General merchandise sales fell 1.9% from June but remained 6.8% above a year earlier. Health and personal care sales were up 12.2% annually, while the combined furniture, home furnishings, electronics and appliances category declined 4.9%.
Individual company results showed similar differences. Pet Valu reported approximately flat same-store sales in its second-quarter results, with weaker transactions offset by larger baskets. Management said it saw almost no movement between mass and specialty channels.
Cineplex reported attendance growth of 9.3% for the same calendar quarter while recording softer results in its location-based entertainment business. The results illustrate why aggregate consumer spending can obscure changes in transactions, basket size, categories and purchase occasions. For retailers, landlords and investors, national retail growth is a starting point for assessing demand, with company and category performance providing the more detailed picture.
Inflation Slows, but Higher Prices Remain
Grocery-price inflation slowed to 2.8% year-over-year in August, below the 3.0% headline Consumer Price Index, but grocery prices remained approximately 29% above August 2021 levels. Slower inflation reduces the pace at which household costs are rising. It does not reverse the accumulated increase consumers have already absorbed.
That helps explain why value seeking can persist even as inflation moderates. Households continue making purchasing decisions against a considerably higher cost base than several years ago.
Editor’s Take & Outlook
What Retailers and Landlords Should Watch
Topline sales can conceal meaningful changes in underlying demand. A retailer may report higher dollar sales while moving fewer units, becoming more dependent on higher-income households, selling a larger share of promotional merchandise or losing individual categories from existing customers’ baskets.
Transactions, units, average basket size and basket composition provide additional insight. Private-label penetration and promotional dependency can show how customers are managing price, while repeat purchasing and retention by customer cohort can reveal whether apparently stable demand is becoming concentrated among particular households. Inventory availability deserves similar attention. When customers switch retailers because an item is unavailable, in-stock performance becomes part of customer retention.
For landlords, the same distinctions matter when evaluating tenant and category performance. Rising sales do not necessarily mean customer counts, unit demand or participation across income groups are strengthening at the same pace.
Outlook: Employment Becomes a Key Variable
The labour market will be important in determining whether differences in household purchasing power widen further. Employment fell by 42,000 in August after a cumulative increase of 181,000 between April and July, while the unemployment rate held at 6.4%. One monthly decline does not establish sustained deterioration, but continued weakness would place additional pressure on households already using credit or savings for everyday expenses.
Retailers also need to distinguish anticipated cost pressures from costs that have reached consumers. RBC’s food-price analysis noted that energy and fertilizer shocks can take months to move through supply chains, while competition and demand influence how much businesses ultimately pass through.
On its September results call, Empire said the impact of new tariffs remained minimal at that point and that it had received only a handful of supplier cost submissions. Potential cost increases remain relevant to the outlook, with their effect on retail prices dependent on how much reaches businesses and how those businesses respond.
Over the coming quarters, employment, transactions, unit volumes, basket composition and purchasing behaviour by customer cohort will help show whether spending resilience is broadening or becoming more dependent on households with greater financial flexibility.
Editor’s Take
Canadian consumers continued spending in Q3 2026, but the headline numbers concealed substantial differences between households and individual purchasing decisions. Some Canadians were using credit or savings to fund groceries, utilities and other essentials, while others retained significant discretionary capacity. Some consumers sought hard-discount formats, while full-service grocery operators continued reporting competitive performance. Spending intentions improved in certain discretionary categories even as value remained a priority.
Consumers can also remain loyal to a retailer while becoming much more selective about what they buy there. A supermarket customer may purchase more private label, wait for promotions or move individual products to a competitor. A task-driven shopper may choose a physical store because the product is immediately available, then switch retailers when it is out of stock.
Retailers are competing over individual items, occasions, trips and baskets alongside the broader customer relationship. Price, availability, convenience, service and product quality all matter, with their relative importance changing according to the customer and the purpose of the purchase.
That makes the composition of demand increasingly important. Transactions, units, basket mix and customer cohorts can reveal changes that topline sales alone may conceal.
In a more selective market, knowing that a customer still shops with a retailer tells only part of the story. Retailers also need to understand which purchases they are keeping, which ones they are losing and why.
Representative Articles
- Canadian Consumers Signal Unexpected Rebound in Spending Intentions — Jul 7, 2026
- Food Inflation Creates More Tactical Grocery Shoppers in Canada — Jul 8, 2026
- Canadian Retailers Face New Discovery Challenge as Shoppers Turn to AI — Jul 14, 2026
- Canadians entering pay periods with much of income already committed: MNP survey — Jul 14, 2026
- Equifax survey finds one in four Canadians expect to make only minimum credit-card payments — Aug 10, 2026
- Canadian consumer insolvencies hit highest quarterly level since 2009: CAIRP — Aug 17, 2026
- BCG: Canadian retail spending splits further as higher- and lower-income households diverge — Sep 17, 2026
- RBC: Canadian Consumer Spending Broadens as Cardholder Purchases Rise in August — Sep 21, 2026
- Retail sales dip in July: Statistics Canada — Sep 24, 2026
- Canadian Shoppers Choose by Mission, Not Channel, New Research Finds — Jul 13, 2026
- Canada loses 42,000 jobs in August: Statistics Canada — Sep 4, 2026
- RBC says grocery prices likely to keep rising faster than overall inflation in near term — Sep 16, 2026
- Consumer prices rise 3% y/y in August: Statistics Canada — Sep 14, 2026
