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 using it for inspiration and expecting retailers to leverage it for enhanced service. However, this technological shift is coupled with significant data privacy concerns, as 70% of consumers worry about sharing personal information. Consequently, robust cybersecurity measures are no longer optional but are critical for building and maintaining consumer trust. While a strong sentiment exists to support local and Canadian businesses (73%), this preference is conditional, as value and convenience remain the ultimate decision-making factors.

The Resilient yet Cautious Consumer

Analysis of the 2025 outlook reveals a consumer base navigating a complex economic landscape. While demonstrating a willingness to spend on the holidays, their behaviour is tempered by significant financial concerns and a strategic focus on maximizing value.

Spending Projections vs. Economic Sentiment

• Projected Spending Growth: Overall holiday spending is expected to rise by 3%. Household finances have seen a modest 3% improvement year-over-year.
• Pervasive Economic Anxiety: This spending increase is set against a backdrop of widespread pessimism.
•  46% of Canadians anticipate the economy will worsen in the coming year, an increase from 36% last year.
•  70% are concerned about a potential recession, up from 63% in the previous year.
• 80% are worried about the impact of tariffs on the Canadian economy.
• Inflation and Value-Seeking Behaviour
• Inflationary Pressure: Inflation remains a primary concern, with 70% of consumers expecting higher prices this holiday season, compared to 65% last year.
• Strategic Spending Reallocation: Consumers are actively managing their budgets. While spending on gifts and experiences has increased by 2% (+$18), they are cutting back by 8% (-$21) in other discretionary categories.
• The Hunt for Value: The focus on value is paramount, with 78% of consumers planning to actively shop for the best deals.

Shifting Shopping Timelines

• An Earlier Start: The holiday shopping season is commencing earlier than ever. One in five Canadians (20%) plan to begin their shopping in October, a notable increase from 15% last year, as they aim to maximize value.
• Black Friday's Dominance: Black Friday has become a central event, with retailers expected to capture almost a quarter of total holiday budgets on that day alone.

The Evolving Retail Landscape

Consumer shopping habits continue to evolve, with a clear demand for a seamless omni-channel experience. While online shopping offers convenience, physical stores retain a distinct and important role, especially as a source of festive inspiration. Generational differences in these preferences are stark.

The Omni-Channel Experience

• Budget Allocation: In-store shopping continues to command the majority of holiday budgets at 55%, with 42% spent online. This split remains consistent with the previous year.
• Online Shopping's Appeal: Six in ten consumers believe holiday shopping is easier online, a sentiment likely amplified by the fact that 48% find the process stressful.
• The Role of Physical Stores: Brick-and-mortar locations are crucial for discovery and experience.

    ◦ One in two shoppers visit stores for gift inspiration and the festive atmosphere.

    ◦ 52% find the in-store shopping experience to be fun and festive.

    ◦ 42% value the personal connections they can make with store associates.

Generational Divides in Shopping Habits

Influence of Loyalty and Personalization

• Loyalty Programs: 63% of consumers indicate that loyalty programs influence their choice of where to shop.
• Personalized Offers: 48% of shoppers are influenced by personalized offers from retailers.
• Value-Driven Online Marketplaces: These platforms are gaining significant traction. One in three consumers have used one in the past three months, and 17% plan to use them for holiday gifts this year (up from 14% last year).

Technology's Dual Role: AI Opportunity and Cybersecurity Risk

The increasing integration of technology, particularly AI, is reshaping the retail landscape. While consumers are embracing AI for a better shopping experience, this enthusiasm is matched by deep-seated concerns about data security, creating a critical challenge for retailers.

Accelerating AI Adoption

• Consumer Awareness and Usage: Familiarity and engagement with AI are growing rapidly.

    ◦ 63% of Canadians are familiar with AI.

    ◦ 50% have used AI in the past three months, a significant jump from 33% last year.

    ◦ 27% are excited about its potential.

• Retailer Expectations: One in four Canadians believe retailers should be leveraging AI both in-store and online to enhance customer service and provide personalized product information.
• Generational Gap in AI: Younger generations are far more engaged with AI technology.

    ◦ Gen Z Canadians are nearly three times more likely than Baby Boomers to have used AI recently (64% vs. 24%).

    ◦ For product research, 33% of Gen Z consumers use AI, compared to only 9% of Baby Boomers.

Critical Cybersecurity Concerns

• Widespread Data Privacy Worries: 70% of consumers worry about sharing personal information with retailers. Their primary fears are:

    ◦ Data breaches and misuse of data (72%).

    ◦ Uncertainty about how their information will be used (70%).

• The Business Impact of a Breach: A security incident has long-term consequences, with 64% of consumers stating they are hesitant to shop at a retailer that has experienced a data breach.
• Consumer Skepticism: There is a low tolerance for data collection, as only one in three consumers believe sharing their data is a necessary part of the modern shopping experience.

The "Support Local" Imperative and Its Limits

There is a strong, stated desire among Canadian consumers to support local businesses. However, this sentiment is conditional and often superseded by the primary drivers of value, brand, and convenience.

• Strong Pro-Canadian Sentiment: 73% of Canadians express a preference for supporting local or Canadian-owned businesses, and 56% prefer to buy gifts that support these enterprises.
• The Primacy of Value: Despite this preference, consumers remain pragmatic. Many are willing to look beyond local options to find better deals or more convenient shopping experiences.
• Retailer Opportunity and Challenge: The challenge for Canadian retailers is to effectively promote their local identity while delivering competitive value, avoiding overstated "maple washing" claims that could alienate savvy consumers.

Shaunna Conway, Partner and National Retail Leader at Deloitte Canada:

"Consumers are signaling that they intend to spend this holiday season, but with mindfulness. This balanced approach is fostering a resilient and resourceful consumer base, creating an environment where retailers can adapt and innovate. This sentiment has a significant impact on consumer behaviour, and Canadian retailers who can deliver meaningful value will be well-positioned to thrive during this holiday season."