Canada’s retail sector continues to generate a steady stream of expansion announcements. International brands are entering the market, established chains are opening new locations, and substantial capital continues to flow into stores, shopping centres and retail real estate across the country.
Employment data are presenting a much less straightforward picture. Employment in wholesale and retail trade was down by 55,000 positions in August compared with a year earlier, a decline of 1.8%, according to Statistics Canada’s latest Labour Force Survey. It was the largest year-over-year employment decline among the major industries tracked in the survey.
The weakness came as overall Canadian employment fell by 42,000 in August and the national employment rate declined to 60.8%. The unemployment rate remained at 6.4%, while wage growth continued to slow.
For a sector that appears to be expanding based on the pace of store-opening announcements, the numbers raise an important question: why isn’t employment showing comparable strength?
Suzanne Sears, president of retail recruitment firm Best Retail Careers International, says the answer has much to do with when expansion decisions were made and how retailers are staffing the stores they open.
“Retailers are afraid to do more,” Sears said, describing employers as increasingly cautious amid economic, trade and geopolitical uncertainty. She said hiring interest had started to improve through the spring before confidence weakened again.
Today’s Store Openings Were Often Planned Much Earlier
One of the biggest disconnects between store growth and current hiring comes from the long lead times involved in retail real estate.
Many stores opening across Canada today were conceived, negotiated and financed well before current economic conditions emerged. Retailers may have begun negotiating leases a year or two earlier, committed capital to construction and fixtures, developed merchandise plans and entered contractual obligations long before a storefront was ready to open.
Sears said retailers are proceeding with investments already in the pipeline even as their current appetite for additional hiring has become more cautious.
The distinction is particularly relevant for landlords, brokers and others watching retail expansion. A store opening in the second half of 2026 may reflect a decision made under very different economic conditions in 2024 or 2025. The number of new stores opening therefore offers an incomplete picture of retailers’ current confidence and employment intentions.
Retailers Are Opening Stores With Leaner Teams
Staffing expectations have also changed, according to Sears. She described situations where a store that might once have opened with six full-time employees could now begin operating with three as retailers scrutinize payroll and look for greater productivity from their existing teams.
That can allow store counts and occupied retail space to grow without producing the same employment gains that expansion might have generated in the past. Companies can centralize some functions, tighten scheduling, broaden management responsibilities and ask individual employees to handle a wider range of tasks.
Sears said staffing is frequently one of the first areas companies examine when seeking cost reductions because changes to payroll can quickly affect financial performance.
Operating with fewer people does not mean retailers have stopped looking for workers. Sears is seeing companies reduce their overall staffing expectations while continuing to have difficulty filling some of the positions they need.
Retail Still Has Tens of Thousands of Vacancies
Statistics Canada’s separate payroll and job-vacancy data provide some context for what Sears is seeing in recruitment.
Retail trade had approximately 50,200 vacant positions in June, representing a job vacancy rate of 2.5%. The same Statistics Canada data put retail payroll employment at approximately 1.98 million.
Sears said retailers are increasingly looking for part-time employees, including workers who can reliably provide around 24 hours of availability each week. Those candidates can be difficult to find even when a company’s overall staffing target has been reduced.
A retailer that once sought a larger team of full-time employees may now be trying to operate with a smaller combination of full- and part-time workers. Candidates, meanwhile, have their own requirements around hours, compensation and scheduling. When those needs do not align, vacancies can remain open even as a retailer keeps tight control over overall staffing.
It is one reason reports of hiring difficulties can coexist with weaker employment numbers. The issue increasingly involves the types of positions being offered and the terms attached to them.
Retail-Specific Data Show a More Nuanced Picture
There is an important distinction behind the headline figure showing 55,000 fewer workers. The Labour Force Survey combines wholesale and retail trade into a single industry category. The figure therefore does not mean retail trade alone lost 55,000 workers over the past year.
Statistics Canada’s Survey of Employment, Payrolls and Hours provides a separate measure of retail employment based largely on employer payroll records. Its latest data, available through June, show that retail employment had recovered during the spring after weakness earlier in the year.
Retail payroll employment declined by 3,900 positions in June, or 0.2%, following three consecutive monthly increases that added a combined 24,000 positions. Despite the June decrease, payroll employment in retail was 8,100 positions, or 0.4%, above its level a year earlier.
The two Statistics Canada surveys measure employment differently and cover different reference periods. The Labour Force Survey is a household survey and includes self-employed workers, while the Survey of Employment, Payrolls and Hours measures employees receiving pay and benefits and relies heavily on payroll records. Statistics Canada cautions that short-term movements between the two measures can differ because of their concepts, definitions and methodologies.
The available data do not show an uninterrupted decline in retail employment. Payroll employment recovered through the spring, while the more recent Labour Force Survey shows weakness across the broader wholesale and retail sector heading into late summer. Upcoming payroll releases will provide a clearer indication of whether that more recent weakness is also appearing in retail specifically.
Retail Sales Have Continued to Grow
The employment picture also comes against a backdrop of relatively resilient consumer spending. Canadian retail sales increased 0.6% in June to $74.3 billion and were 5.2% higher than in June 2025. In volume terms, which account for price changes, sales were up 1.5% from May and 2.1% year-over-year.
Core retail sales, excluding gasoline stations and fuel vendors and motor vehicle and parts dealers, rose 1.2% in June. General merchandise retailers recorded a 2.7% monthly increase, while clothing, clothing accessories, shoes, jewellery, luggage and leather goods retailers were up 3.1%.
Ontario retail sales were 5.9% higher than a year earlier, while Toronto recorded a 6.6% year-over-year increase.
The figures add another dimension to the employment discussion. Retail sales can grow without staffing increasing at a comparable rate, particularly as the mix of retailers, store formats and labour requirements changes.
There are signs of caution heading into the second half of the summer. Statistics Canada’s preliminary estimate suggested retail sales declined 0.8% in July, although the agency cautioned that the early estimate was based on responses from 56.5% of companies surveyed and will be revised.
Hiring Strength Varies Considerably Across Retail
Sears says the recruitment market differs considerably by retail category. She is seeing relative strength among lower-ticket, trend-driven and specialty retailers, particularly businesses with a clear identity and merchandise that gives consumers an accessible discretionary purchase. She pointed to MINISO and Uniqlo, along with cosmetics and novelty-oriented concepts, as examples of retailers and categories that appear to be maintaining momentum.
“You have to have a message,” Sears said, arguing that a clearly defined retail identity has become increasingly important as consumers become more selective about discretionary purchases. She sees a tougher environment for generic apparel and traditional office-wear concepts that lack a distinctive proposition.
The broader economic data also show considerable variation across retail. In June, general merchandise sales were 9.6% higher than a year earlier, while health and personal care retailers were up 13.5%. Clothing and clothing accessories retailers recorded a 4.1% year-over-year increase.
The divergence is important in a sector as broad as retail. A growing value or specialty chain can be opening stores and adding workers while another segment of the market is reducing payroll.
Wages Are Part of the Hiring Equation
Compensation is another factor Sears sees affecting retailers’ ability to attract and retain workers. Across the Canadian economy, average hourly wages increased 2.0% year-over-year in August to $37.02, down from growth of 2.8% in July and 3.3% in June. Statistics Canada said the August increase was the slowest pace of wage growth since November 2017, excluding the pandemic period.
Sears said some retail employers have been considerably slower to move wages. She recently recruited for a retailer offering the same hourly wage for a position that it had offered roughly five years earlier, an example she sees as part of a broader challenge around making retail attractive as a long-term career.
She is also encountering people who combine two part-time retail jobs or work in retail while studying for another field. For employers, that can make retention more difficult at a time when many remain reluctant to increase labour costs substantially.
Retail’s Career Ladder Is Changing
The structure of the Canadian retail industry can create another challenge for career development, Sears said. Many large retailers operating in Canada are headquartered elsewhere, leaving some senior functions such as merchandising, finance, strategy and global leadership outside the country. Sears argues that this can narrow the domestic career path for managers who progress through store, district and regional roles.
“Where’s your career after you’re a district or regional manager?” Sears asked, referring to companies where higher-level decisions are made outside Canada.
She sees a different pattern at the top of the organization. Senior-level recruitment remains comparatively active, with continued movement among presidents, CEOs and other executives as companies look for leadership capable of responding to changing consumer behaviour and uncertain economic conditions. Sears said creative, marketing and strategic positions also remain areas where she continues to see activity.
AI Has Yet to Reshape Retail Hiring on a Large Scale
Technology might appear to be an obvious explanation for leaner staffing, but Sears does not see artificial intelligence as a major driver of the employment changes taking place today.
She said Canadian retailers are increasingly using AI and advanced data systems for inventory analysis, forecasting and operational decisions. The technology can help companies process information and improve purchasing or allocation decisions, although employees are still required to interpret the information and determine how it should be applied.
Sears sees significant opportunities for AI in supply chains, logistics, financial planning and inventory management. Implementation also requires investment, training and organizational changes, which she believes will limit how quickly the technology affects staffing.
For now, the pressures she encounters in recruitment are more closely connected to payroll management, scheduling, compensation and the changing mix of positions retailers are trying to fill.
Holiday Hiring Expected to Remain Cautious
The approaching holiday season will provide another indication of how retailers are approaching labour.
Sears expects seasonal hiring to remain restrained under current conditions, with many companies maintaining what she describes as a “wait-and-see” approach. She does not anticipate a significant increase in hiring unless confidence improves.
Her consumer outlook is similarly cautious. Sears expects spending to favour smaller, lower-ticket and more personal purchases, along with experiences and novelty products, as households continue to manage elevated living costs.
Retailers could therefore enter the holiday period focused closely on scheduling and labour costs, particularly if consumer demand remains difficult to forecast.
A Changing Labour Model for Canadian Retail
The mixed signals in Canada’s employment data become clearer when viewed alongside changes taking place inside retail businesses.
Stores opening today may stem from leases and investment decisions made years earlier. Sales can rise without staffing increasing at the same rate. Retailers can operate with smaller teams while struggling to recruit for particular positions, especially when employers and workers have different expectations around hours, scheduling and compensation.
The latest Labour Force Survey still provides a significant warning sign. Wholesale and retail trade employed 55,000 fewer people in August than a year earlier, even as retailers continued opening stores across Canada. The retail-specific payroll numbers add important context: payroll employment had recovered somewhat by June and was modestly higher than a year earlier, while approximately 50,200 retail positions remained vacant.
For Sears, uncertainty surrounding hiring is likely to persist in the months ahead. Retailers continue to recruit, invest and expand, but the staffing model supporting that growth is changing as companies reassess how many employees they need, which positions they want to fill and how they allocate labour across their businesses.
The holiday hiring period and subsequent retail payroll data should provide a clearer picture of whether the weakness seen in the broader wholesale and retail employment numbers is temporary or signals a more sustained shift in Canada’s retail workforce.
