Canadian Consumer Spending Intentions Surge: A Shift Towards Discretionary Spending

Table of Contents

1. Key Highlights:
2. Introduction
3. The Surge in Consumer Spending Intentions
4. Apparel Spending Picks Up Steam
5. Pet Category Remains Exceptionally Resilient
6. Dollar Stores See Slower Growth
7. Big-Ticket Categories Gaining Momentum
8. Mixed Signals in the Toy Market
9. Furniture and Appliance Spending Weakens
10. Convenience Store Branding Shifts
11. Broader Implications for Retailers
12. FAQ

Key Highlights:

• In July 2025, 55% of Canadians expressed intentions to increase discretionary spending, marking a rebound from earlier declines.
• High-income households, especially those earning over $75,000, are driving this spending surge, particularly in apparel, travel, and pet products.
• While sectors like furniture and dollar stores show signs of slowing growth, premium brands may benefit from the renewed consumer confidence.

Introduction

The Canadian retail landscape is experiencing a significant shift as consumer spending intentions have rebounded sharply in July 2025. This change comes after a challenging start to the year when many Canadians were cautious about their financial outlook. A recent report from Stifel Nicolaus Canada Inc. reveals that a notable 55% of survey respondents plan to increase their discretionary spending over the next year. This surge is particularly pronounced among high-income consumers, suggesting a renewed confidence in the economy and personal finance. In this article, we delve deeper into the specifics of this spending rebound, examining key categories poised for growth, shifts in consumer behavior, and the implications for retailers across Canada.

The Surge in Consumer Spending Intentions

The resurgence in consumer spending intentions is not just a blip; it's indicative of a broader trend towards increased discretionary spending among Canadians. The July report reveals a five-point increase from the previous survey in April, representing the second highest level of spending intentions recorded across nine survey periods. This increase is particularly driven by consumers earning over $75,000 annually, who are showing greater confidence in their financial outlook.

Economic analysts suggest that the stabilization of political leadership in Canada, marked by the early approval of Prime Minister Mark Carney, has contributed to this renewed consumer optimism. High-income Canadians are displaying a willingness to spend across various retail categories, reflecting a positive shift in sentiment that could have lasting implications for the retail sector.

Apparel Spending Picks Up Steam

One of the standout categories benefiting from this resurgence is apparel. The report indicates a 51% increase in spending intentions for clothing and fashion, with high-income earners leading the charge—62% plan to spend more in this category. This marks one of the highest levels of intent recorded since 2023, signaling a robust recovery in the fashion retail sector.

Female consumers are particularly driving this growth, and brands such as Aritzia, Groupe Dynamite, and Gildan Activewear are likely to see increased demand as consumers return to shopping for new clothing. The apparel sector's recovery not only highlights changing consumer preferences but also underscores the importance of staying attuned to emerging trends within fashion retail.

Pet Category Remains Exceptionally Resilient

The pet product market is proving to be exceptionally resilient in the face of economic fluctuations. An impressive 76% of survey respondents indicated that they plan to increase their spending on pet food and accessories in the coming year. This figure matches the strongest result recorded in the past nine surveys and highlights the unwavering commitment of Canadian pet owners to spend on their beloved animals.

The trend is particularly pronounced among women and high-income households, suggesting that retailers like Pet Valu may experience a turnaround in same-store sales. With pet ownership on the rise, the continued consumer interest in pet products presents significant opportunities for growth in this sector.

Dollar Stores See Slower Growth

While dollar stores have historically enjoyed popularity among budget-conscious shoppers, recent data suggests that their explosive growth may be leveling off. Although 73% of Canadians stated they would increase spending at dollar stores, this represents the second-lowest increase recorded in the last five surveys. High-income consumers are particularly less inclined to shop at these discount retailers, signaling a potential shift in spending behavior.

This trend could pose challenges for Dollarama and other dollar store chains, which have thrived in an economically pressured environment. As consumer confidence rebounds, many shoppers may prefer to invest in higher-quality or specialized retailers, potentially reshaping the competitive landscape for budget retailers.

Big-Ticket Categories Gaining Momentum

In a surprising development, spending intentions for big-ticket discretionary items are on the rise. Nine percent of respondents indicated they are very likely to purchase or upgrade items such as powersports vehicles, including ATVs, motorcycles, and boats. This figure exceeds the four-year average and indicates solid demand ahead for manufacturers like BRP, which specializes in recreational vehicles.

Travel spending is also experiencing a renaissance. Fifty-seven percent of Canadians plan to fly for their next vacation, up from 55% in April, with an increasing number of high-income households showing a willingness to travel despite rising airfare prices. The growing sentiment that travel is a priority may signal a return to normalcy and a greater willingness to invest in experiences over material goods.

Mixed Signals in the Toy Market

The toy market presents a more complex picture. While overall spending intentions for toys have declined by two percentage points since April, this figure obscures a nuanced reality. Higher-income Canadians demonstrate a willingness to increase spending on toys, with parents aged 18 to 54 showing particularly strong intentions to purchase.

This trend could bode well for companies like Spin Master, known for popular brands like Paw Patrol and Bakugan. As the toy market grapples with shifting consumer preferences, retailers must adapt to the changing dynamics to maintain their competitive edge.

Furniture and Appliance Spending Weakens

In contrast to the optimism in other categories, the outlook for furniture and appliance spending appears more subdued. Only 53% of Canadians indicated they would likely increase spending in this area, a decline of three points since April. Low-income respondents showed the weakest intentions, with only 46% planning to make furniture purchases.

This decline could signal challenges ahead for traditional furniture retailers such as Leon’s Furniture and The Brick, which have seen a drop in consumer preference. Interestingly, retailers like Costco and Amazon are gaining traction as preferred destinations for furniture purchases, reflecting a potential shift towards more versatile shopping options.

Convenience Store Branding Shifts

The research also highlights shifts in preferences within the gasoline and convenience store market. Circle K, operated by Alimentation Couche-Tard, has seen improved brand recognition, with nine percent of respondents naming it as their preferred fuel destination—a significant increase from 2023. Additionally, a growing number of consumers are entering convenience stores while fueling up, suggesting a changing shopping behavior that favors convenience.

This uptick in store visits may reflect a return to discretionary spending habits or a greater reliance on convenience-based shopping. Notably, 18% of respondents reported they do not purchase gasoline at all, a trend that could be influenced by the growing adoption of electric vehicles, though the increase is too substantial to attribute solely to this factor.

Broader Implications for Retailers

The findings from Stifel’s July 2025 update paint a picture of cautious optimism for the retail sector. As high-income households regain confidence, spending is returning in categories that had previously softened. Apparel, travel, and pet products emerge as clear winners, while traditional furniture retailers and value-based channels like dollar stores may experience flatter trends.

Retailers that align themselves with premium positioning, lifestyle branding, and differentiated experiences appear best positioned to benefit from this shift in consumer behavior. While overall market sentiment remains mixed, the current trajectory suggests that discretionary spending is, for now, back in expansion mode.

FAQ

Q: What factors are driving the increase in Canadian consumer spending intentions? A: The increase is primarily driven by renewed confidence among high-income Canadians, stemming from a stabilized political landscape and positive economic outlook.

Q: Which retail categories are seeing the most significant growth in spending? A: Apparel, pet products, and travel are the categories experiencing the most significant growth in spending intentions.

Q: Are dollar stores still a popular shopping option? A: While dollar stores remain popular, their growth appears to be leveling off, particularly among high-income consumers who may be shifting towards higher-quality retailers.

Q: How is the furniture and appliance sector performing? A: The outlook for the furniture and appliance sector is more subdued, with a decline in spending intentions indicating potential challenges for traditional retailers.

Q: What does this shift in consumer spending behavior mean for retailers? A: Retailers that focus on premium products and unique shopping experiences are likely to benefit, while those in value-based segments may face challenges as consumer preferences evolve.