Canadian Retail in 2026: A Resilient Market

As 2026 unfolds, Canadian retail continues to show resilience despite ongoing challenges. The past year has tested the sector, with rising costs, inflation, and shifting consumer behaviour all playing a role. According to the Retail Council of Canada, core retail sales in Canada rose by 6.3% year-over-year in November 2025, reflecting the sector's ability to maintain growth even in uncertain times. While many shoppers are more selective in their spending, the overall demand for consumer goods and experiences has remained steady. However, consumers are increasingly focused on value and pricing transparency, forcing retailers to adapt by offering smarter pricing, clear promotions, and more personalized experiences.

Over the past year, a noticeable divide has emerged in consumer spending habits. On one side, affluent consumers have continued to maintain strong purchasing power. Despite economic headwinds, we saw growth in discretionary categories like jewellery, apparel, luggage and leather goods, and an unexpected rebound in luxury. Luxury hubs such as Yorkdale and Royalmount have continued to build momentum as global brands expand their presence in Canada despite economic uncertainty. On the other side, many middle- and lower-income consumers have adjusted their spending, opting for budget-friendly options like resale, discount grocers, off price, wholesale and liquidation. This divide is expected to continue into 2026, with the gap between high-end and value-driven shopping trends continuing to widen.

Tariffs and rising job anxiety are weighing on consumer sentiment. Job insecurity in industries like steel, automotive, lumber and aluminum is causing some shoppers to hold back on discretionary spending due to uncertainty about the future. The threat of tariffs further impacts the supply chain, driving up costs for retailers, particularly those who rely on imports from the U.S. and Southeast Asia. These factors contribute to a price squeeze, forcing consumers to rethink larger purchases while adding inflationary pressure that retailers must contend with in the coming year.

Looking ahead, retail growth is expected to be measured. The Retail Council of Canada’s recent Retail Conditions findings suggest the sector is shifting from recovery to optimization, with executives prioritizing margin protection, capital discipline, and operational precision. After several years of heavy investment in supply chain visibility, ERP platforms, and e-commerce infrastructure, many retailers are now redirecting capital toward store refreshes, new formats, and selective physical expansion - signaling renewed confidence in brick-and-mortar retail.

As our team worked on hundreds of searches and spoke to thousands of candidates in 2025, they saw a recurring theme - this environment is reshaping leadership demand toward commercially grounded and operationally disciplined leaders capable of navigating complexity, protecting profitability, and delivering consistent value in an increasingly constrained operating landscape.

Retail Employment: A Softer Market, the Same Hard Problems

Retail hiring pressures visibly eased in 2025. Wage growth moderated, candidate availability improved, and job vacancy rates retreated from their pandemic-era highs. On the surface, the labour market appeared to be normalizing.

Beneath that stabilization, however, retail’s core labour challenges remain firmly in place. The sector did not rebound in 2025, it steadied. Employment levels held relatively flat, hiring became more selective, and operators exercised greater discipline than in previous years. The tension facing retailers has shifted away from candidate availability and toward candidate capability. The challenge is no longer finding people, it is finding candidates who are ready to operate in increasingly complex retail environments.

Our experience recruiting for leading retailers of all sizes across Canada at multiple levels across multiple commodities showed us that the greatest strain continues to sit at the mid-level operator layer: store managers, multi-unit leaders, and functional support roles in digital and e-commerce, data analytics and business intelligence, supply chain and inventory planning, category management and merchandising, technology and systems (including ERP and digital transformation), and specialized corporate functions such as finance and compliance.

While resume volume has increased, the depth of experience and readiness has not kept pace with employer expectations. Retailers are seeing more applicants, but finding fewer of them are properly equipped to lead teams, manage performance, and navigate modern operational demands. This has placed additional strain on internal talent acquisition teams and hiring managers, widening the gap between perceived talent supply and actual fit.

In short, hiring feels easier - but hiring well remains difficult.

What the Data Shows

The Retail Council of Canada’s Retail Pulse Dashboard reinforces this reality as the data shows 2025 marked a return to balance after several years of volatility - not a growth cycle. By year end, retail employment stood at approximately 2.3 million jobs, reflecting modest year-over-year gains. Hiring continued, but cautiously, driven by targeted backfills, seasonal normalization, and workforce optimization rather than aggressive expansion.

Retail’s share of total Canadian employment edged down slightly as other sectors grew faster, underscoring that retail is no longer a primary engine of employment growth. At the same time, retail job vacancy rates declined meaningfully, moving closer to historical norms by late 2025. The acute labour shortages of 2021–2023 have eased.

This shift does not signal simplicity but signals a different kind of pressure. Retailers adapted in 2025 not by materially reducing wages, but by managing labour more precisely. Leaner staffing models, tighter scheduling, higher productivity expectations and sharper role definitions became standard. As the sector moves into 2026, success will depend less on access to labour and more on the ability to identify, assess, and retain leaders who can operate effectively in a disciplined, performance-driven environment.

If these challenges seem familiar, you can reach out any time to see how we can help - we’d be happy to chat. Contact Lee Arthur-Burke at 416.420.5316 x1, or via email – 
 

JRoss Observations : Lower Mobility, Higher Friction
 

In 2025, the market has been defined more by hesitation than scarcity. Candidate mobility has slowed, especially among experienced retail leaders. Many are staying with their current employers, seeing more stability and growth opportunities there than in making an external move. As a result, lateral moves are less appealing. Even well-matched roles now require clearer benefits, stronger stability, and a defined path forward to motivate change.

From the hiring manager’s perspective, a perception gap has emerged. Increased resume volume has created the belief that they can secure stronger experience at lower compensation. This expectation is often misaligned with the market and is resulting in rejected offers, longer hiring timelines, and stalled decision-making. With pay transparency legislation rolling out across provinces, candidates are far better equipped to research, compare, and calibrate compensation. This has made them more informed and confident about what constitutes fair and equitable market pay. As a result, misaligned salary expectations surface earlier, low or below-market offers are more quickly rejected, and employers are being pushed to anchor compensation decisions in market reality rather than perception or legacy ranges.

The volume of applicants has made the candidate experience suffer. Delayed responses and inconsistent communication are more common, as overwhelmed hiring teams try to manage higher application volumes. This damages employer brand perception and highlights the value of relationship-driven recruitment.

At the same time, AI and automation are becoming more common in hiring processes. While these tools can boost efficiency, they often add noise without solving the real problem of alignment. Automated screening can increase volume, but it simply cannot replace judgment, context, or trust, especially when it comes to leadership positions where decision-making and credibility are key.

Technology Raises the Bar, it Doesn’t Lower it

Insights from Lisa Hutcheson, Managing Partner at J.C. Williams Group, underscore why this shift will matter even more heading into 2026.

Lisa shared with us that Canadian retail leaders are moving beyond AI pilots into everyday application. Agentic AI is increasingly being used to interpret customer intent, streamline journeys, improve forecasting, and strengthen supply chain visibility - and retailers are adopting it with intention.

She commented that importantly, this evolution is being framed as people-first. AI is designed to support frontline teams, not replace them. But this makes leadership more demanding, not less. AI accelerates decision cycles, raises performance expectations, and increases cognitive load. Managers are now required to translate constant data signals into action while keeping teams aligned, engaged, and productive.

Lisa also noted that at the same time, physical stores remain central to the business. Approximately 80 percent of retail sales still occur in-store. Today’s stores function simultaneously as fulfillment centres, experience hubs, and media platforms. Technology hasn’t reduced complexity - it has redistributed it, placing leadership at the center. As Lisa notes, talent has become the binding constraint in retail’s next phase. Labour participation challenges and persistent skills gaps are pushing flexible scheduling, clearer career pathways, and frontline enablement to the top of the 2026 agenda, particularly as retailers pursue people-centred AI adoption.

Overall, Lisa emphasized that technology does not reduce the need for leadership; it raises the bar. Retail leaders are increasingly expected to guide teams through constant change, balance efficiency with engagement in leaner operating models, convert AI insights into sound human decisions, and sustain culture and accountability under pressure.

Based on our experience in hundreds of searches in 2025 and now more in the first month of 2026, retail  hiring is shifting away from headcount growth toward capability building. The challenge is no longer hiring more people - it is developing and securing leaders who can operate effectively in complexity. Leadership depth, operational discipline, financial acumen, and comfort with data, technology, and automation are now core hiring priorities. Succession planning and bench strength are no longer optional; they are operational imperatives.

Finding candidates with the capabilities required in today’s world and tomorrow’s is what we do. We successfully connect leading organizations like yours with top talent, helping you develop high-performing teams that optimize current results while driving growth and innovation.

Conclusion : A People-Driven Future

Canada’s retail sector enters 2026 with hard-earned discipline and renewed clarity. Consumer demand remains intact, but cautious. Growth opportunities still exist, but they are narrower, more competitive, and more execution-dependent.

In this environment, people strategy becomes business strategy. Retail has always been operational at its core. The next chapter of the industry will be written by organizations that treat staffing not as a cost to be managed, but as a strategic asset - one that directly shapes execution, customer experience, and long-term sustainability.

For retail leaders, 2026 will not be about doing more. It will be about doing better with the right people in the right roles, leading with clarity, discipline, and purpose.

With our exclusive retail focus, extensive network of top retail talent, and highly experienced team of recruiters across Canada, we can help you find those people.