There has been a modest improvement in household finances in Canada, with 32% of Canadians reporting their household is worse off this year, compared to 36% last year. Despite this progress, economic concerns remain high. Reflecting this cautious outlook, holiday spending is projected to rise by a modest 3%, according to a report by Deloitte.
The report Holiday Retail Outlook: Wrapped in resilience: a season of smart spending found:
Canadians are shopping smart and spending wisely
- Despite economic uncertainty, holiday spending is projected to rise by 3%. While spending on gifts and experiences will increase by 2% (+$18), consumers are cutting back in other discretionary categories (-8%, -$21).
- However, economic concerns remain high: nearly half (46%) expect the economy to worsen next year, up from 36% last year. Concerns about a potential recession have also increased (70% vs. 63% last year), and 80% are worried about the impact of tariffs on the Canadian economy.
Value and brand loyalty are driving gift choices
- Consumers are shopping earlier and across multiple channels to maximize value, with 20% starting holiday shopping in October (up from 15% last year) and 1 in 2 planning to shop October promotions and Black Friday.
- Although most (73%) prefer to support local and Canadian businesses this holiday season, many still choose to shop their favourite retailers and brands for gifts, including Amazon (70%), other mass merchants (68%), and warehouse clubs (49%).
- Deal-seeking behaviours may be driven by inflation concerns: 70% of consumers expecting higher prices this year (up from 65% last year), making it a leading factor influencing spending behaviour. This could be contributing to why 8 in 10 shoppers are actively seeking the best deals, and nearly half (52%) choose private label products whenever possible.
More shoppers are turning to AI for holiday inspiration
- Interest and engagement with AI is increasing: 63% of Canadians are familiar with AI, 27% are excited about its potential, and 50% have used AI in the past three months (up from 33% last year).
- Gen Z Canadians are almost three times more likely to have used it recently than Baby Boomers (64% vs. 24%). 1 in 3 (33%) Gen Z Canadians use AI for product research compared to only 9% of Baby Boomers.
- Overall, 1 in 4 believe retailers should use AI to assist with customer service or provide personalized product information.
- Despite this growing adoption, 63% still express concerns and only 17% trust the technology—largely consistent year-over-year. The rise of AI may bring data privacy and security concerns to the forefront: 7 in 10 are worried about sharing their personal information with retailers
“As the 2025 holiday season approaches, Canadian consumers are demonstrating a careful balance between economic caution and a slight improvement in personal financial confidence. While economic uncertainty remains a significant concern, many households are managing their budgets more strategically, spreading holiday spending over several months and capitalizing on early promotions,” said Shaunna Conway, Partner and National Retail Leader at Deloitte Canada.
“Notably, half of Canadians plan to shop during retailer October Promotions and Black Friday, reflecting a shift toward earlier and more deliberate holiday purchasing. Despite a projected 3% increase in overall holiday spending, this growth is concentrated in gifts and experiences, which are up 2% from last year. At the same time, Canadians are pulling back on non-essential and discretionary purchases, which have declined by 8%.
“This selective approach underscores a continued focus on value, with consumers actively seeking deals, leveraging loyalty programs, and opting for private label products to stretch their holiday budgets.”
Compared to last year, several significant shifts are shaping the Canadian holiday shopping landscape, said Conway.
Rising Use of AI and Digital Tools: Younger shoppers, in particular, are embracing AI-powered platforms and social media for product research and inspiration. Familiarity with AI has grown to 63%, and half of Canadians have used AI in the past three months, up from 33% last year.
Earlier Shopping: The trend toward earlier holiday shopping continues, with 20% of Canadians starting in October, up from 15% last year.
Focus on Experiences and Self-Indulgence: There is a growing preference for experiential gifts and self-care, especially among Gen Z and Millennials. Over half of Gen Z shoppers plan to treat themselves this season, compared to a third of Baby Boomers.
“Value remains the dominant factor influencing holiday purchases. While 73% of Canadians express a preference for supporting local and Canadian businesses, many still gravitate toward major retailers and brands such as Amazon (70%), mass merchants (68%), and warehouse clubs (49%). Inflation may be a key driver, with 70% of consumers expecting higher prices this year. This has led to 8 in 10 shoppers actively seeking the best deals and nearly half (52%) choosing private label products whenever possible,” explained Conway.
She said AI and technology are playing an increasingly prominent role in shaping both the shopping journey and retailer strategies: Nearly half of consumers find holiday shopping stressful, and 60% believe it is easier online. Gen Z and Millennials are expected to spend nearly half of their holiday budgets online, while the overall online share remains steady at 42%.
“Even with the rise of AI and digital tools, physical stores continue to play a vital role. By creating engaging in-store experiences or offering exclusive deals available only in-store, retailers can draw customers into their physical locations during the holiday season,” said Conway.
Younger generations are leading the way in AI adoption, with 64% of Gen Z and 69% of Millennials having used AI in the past three months. Gen Z is three times more likely than Baby Boomers to use AI for product research (33% of Gen Z plan to use AI to research products and gifts this holiday season, compared to 9% of Baby Boomers).
“As consumers shift toward AI-powered discovery and social media, retailers should optimize their digital strategies, invest in AI-driven search and chatbots, and maintain a strong online presence. However, real value will come from focusing on high-impact use cases aligned with business needs—not just adopting AI for its own sake,” added Conway.
She said regional trends reveal notable differences in holiday spending and attitudes across the country. The projected holiday spending by region:
National $1,521, +3%
West $1,700, +9%
Ontario $1,613, +1%
Quebec $1,179, -5%
Atlantic $1,313, +9%
Conway said Quebec stands out for its lower planned spending.Residents are more concerned about the economic outlook (52% expect the economy to weaken vs. 46% average) but report less financial stress and lower digital adoption, with only 46% having used AI tools recently (vs. 50% average). Atlantic Canada is the most financially strained, with 43% indicating their household financial situation is worse this year (vs. 32% average). This may drive why Atlantic Canadians are also the most deal-focused, with 75% seeking sale items (vs. 66% average).
Ontario and the West lead in holiday spending, with Ontario showing heightened concern about a potential recession (74% vs. 70% average). The West is at the forefront of AI awareness and usage, with 69% understanding AI (vs. 63% average) and 53% having used it in the past three months (vs. 50% average), noted Conway.
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