Over 70% of Canadian small businesses brace for declining holiday revenue as consumers cut spending
Consumer spending pullback is reshaping the holiday shopping season, presenting both risks and opportunities for investors tracking small business performance and retail dynamics.
More than 70 percent of Canadian small businesses expect either flat or lower sales this season, according to the Canadian Federation of Independent Business (CFIB).
The pressure stems from widespread consumer caution—about 40 percent of Canadians plan to trim their spending due to rising cost of living, while more than 40 percent are cutting back on travel and decorations, according to Bank of Montreal data.
The economic uncertainty has real teeth.
As reported by CBC News, a Bank of Canada survey found that trade action uncertainty is “significantly dampening” consumer spending expectations.
For context, approximately one third of Canadian small businesses are relying on holiday season sales to stabilize their operations.
As per the Retail Council of Canada (RCC), price has become the primary decision driver.
“Price is the top filter for Canadians. They're waiting for sales, price matching and buying discounted,” Santo Ligotti, vice president of marketing and membership with the RCC, stated.
This dynamic is forcing retailers to adapt their promotional strategies.
Rather than concentrating deals into single days, major retailers have extended Black Friday-style promotions across several weeks.
Best Buy Canada launched sales on November 3 with discounts running through November 28, while Walmart offers up to 35 percent off with steeper reductions on select items.
Even small retailers are entering the promotional fray.
According to CBC News, Annie Vanrivong, owner of Wolf & Rebel in Windsor, Ontario, is launching her first Black Friday sale, offering up to 50 percent discounts.
“With the tariffs and everything, our prices have increased, and I think that it's just become not as affordable for most people,” Vanrivong noted.
Fanny Vergnolle de Villers, owner of homegoods and furniture retailer VdeV with three locations across Quebec and Ontario, observed that customers are operating on a “tighter budget,” even as sales have performed well.
Despite economic headwinds, consumer sentiment toward small businesses remains relatively resilient.
According to a Xero survey, 65 percent of shoppers plan to support small businesses this holiday season, and 80 percent feel genuinely proud when making a purchase from a local business.
The economic multiplier effect provides further context.
The CFIB reports that when you shop local, 66 cents of every dollar goes back into the community.
However, the appetite for premium Canadian goods has cooled.
A Bank of Canada consumer survey cited by Financial Post, found that many respondents are unwilling to pay more than 10 percent above the price of imported products for made-in-Canada goods.
As per the RCC, the "Buy Canadian" sentiment has "softened since the beginning of the year."
