Canadians plan to cut holiday spending by 11 per cent this year, but more than half are willing to pay extra for Canadian-made products as trade tensions with the United States influence shopping decisions, according to a new PwC Canada survey.
The accounting and consulting firm’s 2026 Canadian holiday outlook found that consumers expect to spend an average of $1,487 during the holiday season, down from the previous year, while 54 per cent would choose a more expensive Canadian-made product over a similar imported alternative, up from 49 per cent in 2025.
The findings suggest retailers face a combination of tighter household budgets and growing interest in domestic products, creating pressure to offer affordable options while making the Canadian origin of merchandise clear to shoppers. The survey also points to increased interest in artificial intelligence tools for shopping, although physical stores remain the leading purchasing channel.
“Canadians are cutting back, but they’re drawing a hard line on where their money goes,” said Adam Boutros, partner and national consumer markets leader at PwC Canada. “More of them than ever want their money to stay in Canada–and older Canadians are making that choice especially clear: even as they plan some of the steepest spending cuts, two-thirds of baby boomers are still willing to pay more for Canadian-made products.”
Canadian-made products gain ground
The survey found that 72 per cent of Canadians are actively looking for alternatives to U.S.-made products, while just 13 per cent intend to shop across the border this holiday season, down from 20 per cent in 2024.
Baby boomers showed particularly strong support for domestic products, with 66 per cent saying they would pay more for Canadian-made goods despite plans to reduce their overall holiday spending.
However, consumers remain focused on affordability. About 69 per cent said they plan to buy less expensive alternatives to stretch their holiday budgets, while three-quarters reported taking steps to manage seasonal spending.
The survey was conducted in July and early August, before the latest round of tariff escalations. PwC said the results may therefore understate the current level of Canadian sentiment toward domestic products.
For retailers, the findings point to the importance of communicating whether products are made, assembled or designed in Canada while keeping prices accessible.
“Canadian consumers are making more deliberate purchasing decisions than they have in years, with more than half looking to support Canadian businesses and products–giving retailers an opportunity to respond to a renewed ‘Canada strong’ sentiment,” said Anita McOuat, national managing partner, clients and industries at PwC Canada. “Retailers have an opportunity to leverage technology like AI and other digital tools to make Canadian-made products easier to discover, offer personalized recommendations, and clearly communicate value–turning this moment into lasting loyalty.”
Spending cuts vary by generation
The expected decline in holiday spending is not consistent across age groups, with older Canadians planning the largest reductions and Gen Z anticipating an increase.
Planned spending is down 21 per cent among Generation X consumers and 18 per cent among baby boomers compared with last year. Gen Z, by contrast, expects to spend 8 per cent more.
Households with children are also expected to remain an important source of holiday spending. They plan to spend nearly twice as much as households without children and are more likely to give screen-free, hands-on activities and experiences to both children and adults.
The findings indicate that retailers will need to account for differences in spending intentions among consumer groups as they approach the holiday season, with value remaining a priority for many households.
AI use increases as stores remain central
The survey found that 28 per cent of Canadians expect to use artificial intelligence at some point during their holiday shopping, up from 17 per cent last year.
Consumers expect to use AI-powered tools to research products, compare items, find gift ideas and, in some cases, make purchases. Despite the increase in planned digital tool use, physical stores remain the leading purchasing channel across all generations.
About 40 per cent of respondents said they intend to use both online and in-store channels when making purchases, suggesting retailers will continue to need to accommodate shoppers across multiple platforms.
Regional spending intentions differ
British Columbia is expected to record the highest average holiday spending at $1,639, followed by Ontario at $1,567 and Quebec at $1,497.
Consumers in Atlantic Canada plan to spend an average of $1,349, while those in Alberta, Manitoba and Saskatchewan expect to spend $1,261.
Quebec was the only region where planned spending showed no notable year-over-year change, according to PwC.
In an interview with Retail Insider, Elisa Swern, Partner, Consumer Markets Advisory Leader, Canada & APA, PwC Canada, spoke about the survey results.
What does the research reveal about the growing willingness of Canadians to pay more for Canadian-made products, particularly at a time when overall holiday spending is declining?
What we’re seeing this year is a clear ‘elbows up’ sentiment among Canadian shoppers. Even though average holiday spending is projected to decline by 11%, patriotism is playing a major role in where those dollars go. More than half of Canadian consumers (54%) say they are willing to pay more for a Canadian-made product over a comparable alternative, up from 49% last year. What’s particularly fascinating is that this trend is being led by older generations. Baby boomers are pulling back their total spending by 18%, yet two-thirds (66%) of boomers say they’ll pay a premium for Canadian-made goods. It demonstrates that while Canadians are cutting back on overall volume, they are intentional about spending their remaining budget on values that matter to them.
How should retailers respond to the 72 per cent of consumers who are actively seeking alternatives to U.S.-made products, and how important is it for businesses to clearly communicate where products are made, assembled or designed?
With 72% of Canadian consumers actively looking for alternatives to U.S.-made products during their holiday shopping, transparent origin storytelling is becoming increasingly important for retailers. Retailers need to make it effortless for shoppers to identify product origins across all touchpoints. Whether an item is made, assembled, or designed in Canada, that story needs to be front and centre on shelf signage, e-commerce filters, and product packaging. Beyond messaging, retailers must look at their product assortment now to ensure they can sustainably maintain a healthy balance of Canadian alternatives in store at price points that consumers can justify.
With 69 per cent of Canadians planning to purchase less expensive alternatives and average holiday spending expected to fall 11 per cent, how can retailers balance consumers’ desire to buy Canadian with their increasing focus on affordability?
It’s a delicate tightrope for retailers. On one hand, 69% of shoppers plan to buy less expensive alternatives; on the other, over half are willing to pay extra for Canadian products. The key for retailers is to compete on value, not just price. Shoppers don’t necessarily want cheap products—they want smart spending choices. Retailers can balance this by being tactical with promotional timing. For instance, holding dedicated promotional windows for Canadian items during peak shopping periods helps ease the price burden. Retailers should also highlight the long-term value of Canadian-made goods—such as quality, durability, and supporting local communities—so consumers feel confident that their money is well spent.
What do the generational differences in the survey — particularly the spending pullback among Gen X and baby boomers versus increased spending among Gen Z — tell us about how retailers should approach different consumer groups this holiday season?
The generational split highlights a real shift in where holiday momentum is coming from. Older cohorts are tightening their belts significantly—Gen X plans to spend 21% less, and Boomers 18% less. Meanwhile, Gen Z is the only group planning to increase spending (+8%), and millennial households—especially those with children—are driving the highest overall volume. Retailers need a dual strategy: For Baby Boomers & Gen X: Focus on timing and value. More than 43% of Boomers plan to delay their shopping into December, and they care deeply about Canadian-made goods. Target them with late-season, in-store promotions featuring local products. For Millennials & Gen Z: Capture them early. 38% of Gen Z and 33% of millennials plan to concentrate their shopping around Black Friday weekend. They are looking for experiences, screen-free activities for young families, and frictionless, AI-ready shopping channels.
With AI use in holiday shopping rising to 28 per cent while physical stores remain the leading purchasing channel, how do you see AI changing the retail shopping journey, and what should retailers be doing now to adapt?
A: AI usage has jumped significantly from 17% to 28% this year, but physical retail isn’t going anywhere. 74% of Canadians still prioritize in-person shopping. What we’re witnessing is the beginning of ‘agentic commerce,’ where AI tools increasingly remove friction for shoppers by finding products, organizing information from different retailers, and presenting the lowest-cost options, before a consumer ever steps into a store. To prepare, retailers need to ensure their product data, rich content, and pricing strategies are ‘AI-ready.’ If your product information isn’t structured so large language models can easily parse and recommend it, you risk being filtered out before the customer even walks through your doors.
More from Retail Insider:
