Canadian Small Businesses Scale Back Holiday Promos, Hiring as Nearly Half Expect Weaker Spending

VANCOUVER, British Columbia--(BUSINESS WIRE)--Canadian small businesses are entering the holiday season with their guard up after a year of compounding economic pressures. While many typically rely on holiday sales to close the year strong, inflation and weaker consumer spending are forcing owners to temper expectations.

Nearly half (46%) of small businesses are anticipating consumers to spend less this holiday season as Canadians contend with rising prices on everyday costs, according to the 2025 Small Business Holiday Outlook Report by Merchant Growth, Canada’s online financing and growth solution for small businesses.

“Business owners are feeling the squeeze as wages, rent, and supply costs continue to climb, with little sign of a rebound in consumer confidence,” said David Gens, Founder and CEO of Merchant Growth. “Every purchase counts this season. When Canadians shop local, they help keep small businesses open and people working.”

The report captured insights from a targeted group of 60 retail and foodservice businesses across Canada, offering first-hand insights on how B2C industries are approaching the holiday season. The data reveal that many are hopeful yet cautious this holiday season, expecting limited consumer spending, tight profit margins, and slower hiring activity.

Canadians are expected to spend less, start shopping earlier to take advantage of deals

With household budgets tightening, small businesses expect shoppers to be more strategic with when and how they spend.

About 1 in 3 (35%) said they anticipate customers to start shopping earlier to take advantage of seasonal deals. However, many businesses are scaling back promotions this year:

• 38% said they’re running Black Friday promotions
• 17% said they’re running Cyber Monday promotions
• 35% said they’re running Boxing Week promotions

Among those who are running deals, many are focused on attracting new customers (51%), rewarding loyal customers (48%), and boosting cash flow (45%).

Notably, 42% said they’re not offering any discounts or promotions this holiday season.

Higher prices, weakened consumer spending limit sales gains

While consumer spending expectations remain subdued, more than half (55%) said they still expect higher sales than last year, with 63% forecasting an increase between 11% and 25%.

However, 1 in 4 (25%) said they’re expecting lower sales, driven by higher prices/inflation (36%) and reduced consumer spending power (25%). Contention with U.S. sales has also added strain, with 1 in 10 (10%) reporting that they have cut all shipments south of the border due to increased tariffs, costs, and regulatory barriers.

Seasonal hiring is on pause

Labour costs continue to constrain small business operations. An overwhelming majority (77%) of small businesses said they’re not hiring seasonal staff for the holidays because they can’t afford additional wages (28%), it’s been difficult to find qualified workers (24%), and they’re uncertain about their sales outlook (15%).

These figures suggest that while many small businesses are expecting a modest increase in sales, they’re prioritizing financial stability over expansion.

About Merchant Growth
Merchant Growth is a leading Canadian financial technology company that specializes in small business financing. Founded in 2009, Merchant Growth has provided more than $1 billion in growth financing to entrepreneurs across the country. Using technology-driven underwriting, transparent terms, and dedicated customer support, Merchant Growth makes business financing convenient, accessible, and built for growth.

Merchant Growth was named one of Canada’s Top Growing Companies by The Globe and Mail’s Report on Business magazine in 2025.

To learn more, visit: www.merchantgrowth.com.

Survey Methodology:
From October 23 to November 7, 2025, Merchant Growth surveyed 60 small businesses in Canada’s retail and foodservice sectors.