Full Breakdown
K-Shaped Economy Shapes Holiday Spending Trends in Canada
12/26/2025, 5:42:32 AM
Overview of Holiday Spending Trends
Data released on December 23 by Visa Canada indicates that holiday retail spending in Canada, unadjusted for inflation, increased by 4.4 percent year-over-year across all payment types. This growth was particularly driven by sectors like clothing and accessories, while practical general merchandise also saw a rise. However, Black Friday, which typically attracts younger shoppers, experienced a decline in spending compared to previous years. Myriam Belzile-Maguire, co-founder of Maguire Shoes, noted that while December sales are up year-over-year, the peak demand has shifted earlier in the season.
The K-Shaped Economic Effect
The current holiday shopping landscape reflects a "K-shaped" economic recovery, where higher-income consumers are thriving while lower-income groups face challenges. Andrew Lutfy, CEO of Groupe Dynamite, reported a revenue increase of approximately 40 percent year-over-year, attributing this success to the resilience of affluent consumers. Paul Ferreira, senior vice-president of retail at JLL Canada, highlighted that upper-income shoppers are driving nearly all expected growth in holiday spending, which is projected to average $1,646 per person, an 8 percent increase.
Consumer Behavior Insights
The disparity in consumer confidence is evident, with higher-income households enjoying more wage growth and increased disposable income. Conversely, lower-income earners are experiencing financial strain. JLL's holiday retail report indicates that spending among affluent consumers is concentrated in experiences and travel, while giftable goods are expected to see a decline. Notably, nearly 60 percent of Gen Z consumers plan to use credit for their purchases, contrasting with older generations who are more confident in their spending habits, particularly on Canadian-made products.
Official Statements & Responses
Pat Pellegrini, president and CEO of Vividata, noted a significant increase in Boxing Day shopping intentions among adults aged 45 to 49, who are 23 percent more likely to participate than the general population. Additionally, households earning between $100,000 and $150,000 have also shown increased interest in post-Christmas sales.
Criticism & Opposition
Despite the overall positive outlook for certain sectors, the decline in Black Friday sales raises concerns about the sustainability of consumer spending. Critics argue that the K-shaped recovery may exacerbate economic inequalities, leaving lower-income consumers further behind as they struggle to participate in holiday shopping trends.
Conflicting Reports & Gaps
While some reports indicate a robust growth in luxury and premium goods, others suggest a decline in spending on giftable items. This discrepancy highlights the fragmented nature of the current retail environment, where not all sectors are benefiting equally from the holiday shopping season.
Verbatim Quotes
“December is still up year-over-year, but the peak demand has clearly moved earlier in the season.” — Myriam Belzile-Maguire, Co-founder, Maguire Shoes
“Higher-income earners saw more wage growth, and lower-income earners saw less,” — Paul Ferreira, Senior Vice-President, JLL Canada
“households that may own homes, may probably own hard assets, may even have equity portfolios … is feeling pretty good,” — Andrew Lutfy, CEO, Groupe Dynamite
“According to PwC, nearly 65 per cent of baby boomers said they would choose a more expensive made-in-Canada product this holiday season.” — PwC Report
This analysis of holiday spending trends in Canada underscores the complexities of the K-shaped economic recovery, revealing both opportunities and challenges for consumers and retailers alike.
