Canada’s retail sector endured a difficult 2025 marked by geopolitical uncertainty, shifting consumer behaviour and major corporate upheaval, according to retail analyst Bruce Winder.
Winder said trade tensions with the United States cast a long shadow over the year, making companies cautious about hiring and investment while prompting consumers to rein in spending. Inflationary pressures tied to those trade issues added to the uncertainty, creating a challenging environment for many retailers, particularly those targeting middle-income shoppers.
Value-oriented retailers performed relatively well as consumers traded down to save money, Winder noted, pointing to strong results among discount grocers, dollar stores and mass merchants, as well as continued strength at major e-commerce players. Luxury retailers also fared better than most, benefiting from spending by affluent consumers. By contrast, mid-market retailers and much of the restaurant sector struggled as households cut discretionary spending and opted to eat at home more often.
The year was also shaped by several notable trends. Artificial intelligence became more mainstream in retail, particularly for product discovery and comparison, while buy-now, pay-later services expanded. Same-day and near-instant delivery gained momentum in major cities, either through retailers’ own networks or partnerships with third-party delivery platforms. Retail theft remained a concern, and “buy Canadian” sentiment strengthened amid trade disputes.
One of the most significant developments was the shutdown of Hudson’s Bay, which left large amounts of vacant retail space across the country. Winder said the future of those properties will depend heavily on location, with prime mall sites more likely to be re-tenanted than those in weaker centres. He added that retailers may increasingly turn to non-traditional tenants such as gyms, medical offices or automotive uses.
Looking ahead to 2026, Winder expects continued polarization between affluent and budget-conscious consumers, ongoing tariff uncertainty, deeper use of AI in retail and further pressure on weaker retailers as the sector adapts to slower population growth and changing labour dynamics.
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