Canada Budget Shopper: 2026
"Budget shopping is gaining relevance amid Canadians' pessimism about their finances. Brands need to demonstrate value creatively, without eroding profits."
Scott Stewart, Associate Principal, Lifestyles & Retail
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EXECUTIVE SUMMARY
- What you need to know
- Outlook for budget shopping
- Opportunities
- Build on the emotion of value
- Anticipate the inevitable generational shift
- The competition for consumer spend extends far beyond categories
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THE MARKET
- Consumers and the economic outlook
- Canadian finances aren’t dire, but they aren’t thriving either
- Graph 1: current financial situation, 2022-25
- Financial stress is rising, but is in line with pre-COVID norms
- Graph 2: share of indebted households behind on payments for at least 60 days in any credit category, 2015-25
- Youth unemployment has grown in recent years
- Graph 3: youth unemployment rate, 2022-25
- A quarter of Canadian adults are retirement-aged
- Graph 4: 65+ year olds as a share of total population, 2005-25
- Career starts vs career ends highlights the age imbalance in Canada
- These two groups account for a third of the market
- Food prices make inflation feel worse than it actually is
- Graph 5: consumer price index, 2022-2025
- Rising costs outside the consumer market squeeze spending budgets
- Graph 6: CPI of property taxes and other special charges, 2018-25
- Wage rates continue to outpace overall inflation, but not food
- Graph 7: change in average wage rate (all employees, all industries), 2021-25
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THE CONSUMER
- Budgeting approach and motivators
- Lead with perceived value, not restriction; half of consumers shop with a budget, but most have some flexibility
- Graph 8: budgeting approach, 2025
- Make trade-ups feel sensible, not indulgent – flexibility is a privilege
- Graph 9: “I watch my finances but do not follow a budget,” by financial situation, 2025
- Budgets are becoming more common
- As budgets are becoming more common, reinforce “safe to spend” cues
- Graph 10: budgeting approach, 2022-25
- Avoid one‑note “budget” framing since there are a number of reasons consumers seek out value
- Graph 11: biggest motivator for seeking out deals/value (respondents could select only one), 2025
- Getting ahead vs keeping up: avoid hardship‑only messaging
- Graph 12: biggest motivator for seeking out deals/value (respondents could select only one), by financial situation, 2025
- As deal seeking becomes the default, affirm the habit – don’t dramatize it
- Graph 13: it’s second nature, by age and financial situation, 2025
- Predicting the future of budget shopping
- Budget shopping word association
- Consumers are generally positive about seeking deals
- Graph 14: words associated with shopping for deals/value, 2025
- Consider your product and clientele when deciding how to frame deals
- Graph 15: words associated with shopping for deals/value, by financial situation, 2025
- Brands will need to tailor value messaging to these different attitudes
- Target “second-nature” savings shoppers with frictionless value cues; these consumers don’t plan to save, they expect savings to be built in
- Graph 16: words associated with shopping for deals/value – “second-nature”, by budgeting approach, 2025
- Second-nature saving is an opportunity and a threat
- Simplify loyalty mechanics to engage deal-curious younger consumers
- Graph 17: words associated with shopping for deals/value, by generation, 2025
- Consumers feel good about finding deals
- Personal budget expectations for the year ahead
- Canadians aren’t too optimistic about their personal finances
- Budget anxiety, not hardship, will shape Canadians’ spending behavior
- Graph 18: budget expectations for 12 months from now, 2025
- Spending intent and spending power sit in different generations: younger consumers are more optimistic about their finances
- Graph 19: budget expectations for 12 months from now, by generation, 2025
- What happens if Baby Boomers stop spending?
- Tight budgets put non-essential categories in a more vulnerable position
- Graph 20: how shoppers’ purchase decisions would change if their budgets tightened, 2025
- Expect budget adjustments to leave non-essentials out in the cold
- The current state of budgets and personal finances
- Consumers are depending on high-interest debt
- Financial challenges create opportunities in certain sectors
- Full-time workers are carrying credit card balances
- Graph 21: “I’ve paid interest on a credit card balance in the past 12 months (% yes),” by employment status, generation, parental status and time in Canada, 2025
- Younger shoppers will eventually need help managing BNPL payments
- Graph 22: “I’ve used buy now, pay later financing on a purchase in the past 12 months”, by generation, 2025
- Debt tools illustrate how economic trends affect consumers at a personal level
- A precarious labour market adds to the challenges
- Fears of job loss will make consumers hesitant to spend
- Graph 23: attitudes about current employment, by type of employment, 2025
- Fears of job loss are fueled by a tough job search market
- Consumers’ attitudes direct their behaviours
- Changes in budget distribution
- Groceries and other essentials account for an increasing share of spend
- Graph 24: spending categories that are taking up a larger share of household budgets than a year ago, 2025
- Gen Z has so far avoided the squeeze from essential expenses
- Graph 25: spending categories that are taking up a larger share of household budgets than a year ago – essentials, by generation, 2025
- Older consumers are facing cost pressures on categories outside their control
- Gen Zs are an opportunity when they’re not spending on essentials
- Graph 26: spending categories that are taking up a larger share of household budgets than a year ago – non-essentials, by generation, 2025
- The restaurant industry is caught between a rock and a hard place
- Household budgets are all-encompassing; every dollar has to be fought for
- Budget shopping tactics across categories
- For loyalty programs, fast-earning rewards – not emotional loyalty – will drive engagement
- Graph 27: tactics typically used to save money – use loyalty programs, 2025
- The leading loyalty programs are based in groceries and personal care
- Store brands are highly competitive in the OTC and VMS categories; other categories should make private label feel like an easy smart decision
- Graph 28: tactics typically used to save money – buy store brand, 2025
- Apparel shoppers will trade down on retailer, but not necessarily brand
- Graph 29: tactics typically used to save money – shop at low-priced retailers, 2025
- Frequent‑purchase categories reward broad savings; others require precision
- Budget shopping vs cause shopping
- Embed causes into value, not as an added cost
- Budget pressure exposes the limits of values-driven purchasing
- Graph 30: actively chose products made in Canada over imported items in the past two months, by financial situation, 2025
- Companies invested in cause-based purchases should anticipate softening demand
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INNOVATION AND MARKETING
- Fast food brands are making their deals stand out from the crowd
- Fashion brands are helping consumers get more value out of their wardrobe
- Clothing isn’t the only industry where longer-lasting products can help household budgets
- Sling TV makes it easier to find flexibility in monthly budgets
- Scotiabank wants to form a budget-friendly connection with Gen Z
- Brands are empathizing with consumer
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APPENDIX
- Report scope
- Consumer research questions
- Consumer research questions – crosstabs
- Consumer research methodology
- Generations
- Abbreviations
A quarter of consumers (24%) follow a strict budget – in 2016, that proportion was just 16%. Meanwhile, 35% of consumers expect their budgets to get tighter over the next year, compared to just 20% who believe they’ll get more flexibility. Consumer sentiment seems to be shifting towards stricter budgets and conservative spending habits; not necessarily because the economy is dire at this point, but because consumers are worried about their prospects and are adjusting their behaviours in response to those instincts.
That prioritization of budgets and savings is an opportunity for the brands and retailers that are built on those value pillars. However, to avoid a competitive race to the bottom on price, they’ll need to find ways to demonstrate value beyond just dollars and cents. Looking longer term, this unique period (starting in 2022 with rapid inflation) when budget shopping is in the spotlight could ultimately lead to established habits that continue even after the economy improves. For many people, budget shopping becomes second nature – so if consumers spend years approaching the market in that way, it will eventually become natural, and they’ll continue to seek out budget-friendly deals even if they don’t need to.
This Report Looks at the Following Areas:
- A look at current macro trends and how the broader economy impacts budget shopping attitudes and behaviours
- Assessing how people budget, how that has changed and their feelings about budget shopping
- Predicting what’s next by measuring consumers’ expectations about their future budgets
- Measuring the current state of personal budgets, including usage of credit debt and BNPL
- Understanding budget pressure by identifying the categories that comprise a larger share of household spending vs a year ago
- Identifying what budget shopping tactics are used across different product categories
- How cause-driven purchases like sustainability and localism are under threat when budgets tighten
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