Canadian consumers are heading toward the holiday season with less conviction about opening their wallets, according to a new Stifel survey that points to increasingly selective discretionary spending.
Just 42% of respondents expect to increase their holiday shopping budgets this year, down nine percentage points from a year ago and tied with 2023 for the lowest level since Stifel began asking the question. The decline was particularly pronounced among households earning more than $75,000 and among female respondents.
The September 29 report, based on a survey of 300 Canadian adults conducted the previous week, presents a more complicated picture than an across-the-board consumer pullback. A majority still expect to increase discretionary spending over the coming year, but considerably fewer express strong confidence that they will do so.
For retailers, that combination points to a tougher fight for discretionary dollars. Consumers may continue spending, but the survey suggests they are becoming more deliberate about where incremental spending goes, with substantial differences emerging between categories and income groups.
Discretionary Spending Holds Up as Confidence Weakens
Overall discretionary spending intentions actually improved in Stifel’s latest survey. Fifty-eight per cent of respondents said their spending on items they want but do not need will increase over the next 12 months, one percentage point higher than in July and above the 52% average of the past three years.
The stronger headline number masks weaker conviction. Only 9% of respondents said they were “very likely” to increase discretionary spending, the lowest level in more than three years. Higher-income consumers recorded their weakest reading in six quarters, while respondents earning less than $75,000 produced their strongest reading in more than three years.
The shift is particularly notable because Stifel’s July survey had pointed to an unexpected rebound in Canadian spending intentions. At that time, discretionary spending expectations were strengthening across several categories, including dollar stores. The September results suggest that consumers have not abandoned plans to spend more, but confidence behind those plans has weakened.
The findings fit with other indicators of Canadian consumer caution. The Bank of Canada’s second-quarter Canadian Survey of Consumer Expectations found that high prices and economic uncertainty continued to restrain spending plans, with consumers reporting substitution toward cheaper essentials and reductions in some discretionary activities.
Statistics Canada’s latest retail trade figures have also been uneven. Retail sales declined 0.7% to $73.7 billion in July, while sales volumes fell 1.1%. A preliminary Statistics Canada estimate pointed to a 1.3% rebound in August, making the broader picture less consistent with a straightforward spending contraction.
For retailers, the more consequential issue may be the gap between consumers expecting to spend more and those firmly committed to doing so. Purchases made with less conviction are more susceptible to price, promotions, economic uncertainty and competing demands on household budgets.
Higher-Income Shoppers Show Greater Caution
One of the more notable findings in Stifel’s survey is the deterioration among higher-income consumers. Respondents earning more than $75,000 showed weaker intentions across several categories, including discretionary goods, holiday shopping, apparel, toys, pet products and quick-service restaurants.
Stifel noted that softness among higher-income consumers could have a disproportionate impact because of their greater spending power. The survey does not indicate these households are financially distressed, but it does suggest they have become less willing to expand discretionary spending.
That broadens an affordability discussion that has frequently centred on lower-income households. For retailers selling discretionary products, spending capacity alone does not generate a sale. A household can afford another jacket, restaurant meal, sofa or vacation and still decide the purchase can wait.
Dollar Stores Continue to Capture Spending
Value retail remains comparatively resilient. Sixty-eight per cent of Stifel respondents expect to increase spending at dollar stores over the coming year, down seven percentage points from July and below the three-year average, but still substantially higher than the readings for many discretionary categories.
Stifel also found improved spending conviction among higher-income respondents and said the result may be indicative of continued trading down. The finding is notable because trade-down behaviour need not be confined to households under the greatest financial pressure. Consumers with more spending capacity can become more price-conscious as well.
Dollarama’s recent performance provides useful context. The retailer reported Canadian comparable-store sales growth of 5.4% in its latest quarter, including transaction growth of 3.7%. President and CEO Neil Rossy said households were making “careful spending decisions” while continuing to rely on Dollarama for value.
Those results do not establish that Stifel’s surveyed consumers are moving their spending specifically to Dollarama. They do show that a major value retailer continues to generate traffic growth while consumers report greater caution in several other areas.
Apparel Softens While Strong Brands Keep Growing
Clothing provides perhaps the clearest illustration of why weaker category-level intentions do not necessarily translate into weak results for every retailer.
Forty-seven per cent of respondents expect to increase clothing and apparel spending over the next 12 months, down three percentage points from July. Stifel also found a substantial deterioration in conviction, particularly among higher-income and female respondents, and characterized the findings as negative for Aritzia, Groupe Dynamite and Gildan Activewear.
Yet Aritzia reported Canadian revenue growth of 25% in its latest reported quarter, while Groupe Dynamite reported comparable sales growth of 10.3% and total revenue growth of 29.8%.
The timeframes are different. Those company results measure recent sales performance, while Stifel is asking consumers about intentions over the next 12 months, so they should not be treated as contradictory measures of the same period. Together, however, they illustrate an important competitive reality: weaker category intentions do not prevent individual retailers from gaining share.
If apparel spending becomes harder to capture, brand strength becomes more consequential. Consumers do not distribute their clothing budgets evenly, allowing retailers with strong demand to grow while competitors contend with a less accommodating category backdrop.
Holiday Budgets Weaken While Toy Spending Holds Up
The holiday results show a similar divergence. Despite the nine-percentage-point decline in overall holiday spending intentions, 55% of respondents expect to increase spending on toys for children over the next 12 months, broadly in line with Stifel’s historical average.
Respondents aged 55 and older were particularly notable. Forty-seven per cent expect to increase toy spending, eight percentage points above that cohort’s average across Stifel’s previous surveys.
The survey does not establish how households will redistribute more constrained holiday budgets, but the resilience of toy spending suggests some purchases may receive priority while others face greater scrutiny. For retailers, the composition of holiday spending could prove as important as the size of the overall budget.
Restaurants, Furniture and Travel Face More Pressure
Other discretionary categories show considerably greater weakness. Only 40% of respondents expect to increase spending at quick-service restaurants, down nine percentage points from Stifel’s previous survey, with intentions among consumers aged 18 to 34 falling 17 percentage points. Younger consumers nevertheless remain the only cohort in what Stifel describes as expansionary territory.
Furniture spending remains similarly subdued. Forty-seven per cent of respondents expect to increase spending on furniture or appliances, unchanged from July and the lowest level recorded in Stifel’s past nine surveys.
Travel intentions have also deteriorated. The proportion of respondents planning to fly for their next vacation fell to 47% from 54% in July and 58% a year earlier. Stifel suggested the results may reflect a divided market in which some consumers are being priced out while premium, business and long-haul demand remains comparatively strong.
Restaurants, furniture and leisure travel share an important characteristic: consumers have considerable discretion over when and whether to make those purchases. Meals can be shifted home, furniture replacement deferred and vacations postponed or changed, leaving these categories particularly exposed when households become less confident about discretionary spending.
Retailers Compete for a More Tightly Allocated Dollar
Stifel’s survey describes a consumer market with competing signals. Overall intentions to increase discretionary spending remain relatively high even as conviction weakens. Dollar-store spending remains elevated, while apparel, restaurants, furniture and travel show greater caution, and holiday budgets are under pressure even as toy spending holds up.
That environment can widen the gap between businesses with strong customer propositions and those relying on a broadly rising consumer market. Price and value can win spending, as can brand desirability, product relevance and convenience, but weaker conviction leaves less room for retailers that give consumers little reason to prioritize a purchase.
Heading into holiday 2026, the question may increasingly be where Canadians concentrate their spending, not simply how much they spend in total. If consumers continue allocating discretionary dollars more selectively, market-share gains by stronger retailers can coexist with considerable pressure across the categories in which they operate.
