Fall and holiday shopping is going to look a little different in stores like Costco heading towards the end of 2025, as some big retailers say they’re cutting down on seasonal offerings to focus on essentials.
Depending where you shop, this could mean fewer items like Christmas trees and holiday displays.
Costco says it has “thinned down” its seasonal offerings, especially in-store, in response to customers pulling back on spending for non-essential items.
“(Shoppers) remain very choiceful in their spending on discretionary items,” said Gary Millerchip, Costco’s chief financial officer, speaking during an earnings call to investors on Sept. 25.
“(We) really had to evaluate all the discretionary items — the toys and the trim and the decorations and those kind of things and made decisions based on the necessities,” added president, CEO and director Ron Vachris at Costco during that same earnings call.
“Christmas trees, we skimmed that. We really thinned down that whole category and down a lot of the additional seasonal areas as well.”
Costco says its latest reporting quarter saw sales increase by eight per cent, and its membership base grew by more than six per cent compared to last year.
Although Costco says they still plan on stocking seasonal items, including reusable Christmas trees, decorations, and gifts like toys and electronics, this new approach means there may be fewer options available and smaller displays for customers to see in-store.
This comes as multiple reports show consumers are pulling back on spending overall, with high inflation and uncertainty about the trade war weighing on sentiments.
These pressures mean households are being more cautious with their budgeting to prioritize important essentials like food and clothing, and putting off non-essential purchases for longer.
“It’s more about the affordability, and they’re not the only one who’s sort of making this change. It seems like retailers are reading the room,” says Bruce Winder, a retail analyst and president at Bruce Winder Retail.
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“They know that consumers are a little stingy on discretionary items this year, like last year, and they’re trying to sort of showcase a little more on the essential side.”
Costco is known for its wholesale retail business, which operates in warehouses for the public in addition to online sales. Customers need a membership to make purchases, and Costco generates revenue both from items sold and membership fees.
“I think it’s probably a situation where people say ‘I already have a tree. I already have some decor. If I had extra money, I might upgrade my tree. But no, I’m going to get a few more years out of my tree,’” says Winder.
“Some of these categories like trees and decor, they have a life cycle where maybe every five or 10 years you replace your tree or you replace your decor. So I think they’re counting on consumers maybe deferring that a little bit.”
Winder said it’s part of a shifting trend among many retailers like Canadian Tire and Amazon to adapt to changing consumer priorities amid financial strains.
In its latest quarterly earnings release from August, Canadian Tire reported that retail sales increased by nine per cent, and the company said in the statement that its customer base continues to shop for “items they need” and that it was trying out “new store concepts.”
Canadian Tire also says it believes customer demand will stay strong, including for seasonal items, heading into the holiday shopping season.
“Consumer demand has exceeded our expectations, and they (dealers) have been buying accordingly. One early signal for us is their Christmas orders have been really, really strong,” said chief operating officer TJ Flood at Canadian Tire, speaking to analysts during an earnings call in August.
“We’re watching this very closely, as are dealers. But right now I would say the sentiment is good, and they’re definitely buying to support the business.”
Canadian retailer Dollarama has also benefited from this change in consumer priorities in recent years, with consumers prioritizing essentials and value more than previous years.
In its latest reporting quarter, Dollarama says it saw in-store sales in Canada grow almost five per cent compared to a year earlier.
“The Canadian consumer remains fragile and cautious on discretionary spending in a context of continued economic uncertainty,” said chief financial officer Patrick Bui at Dollarama speaking in August during the company’s earnings call to analysts.
“We are mindful that this may have an impact on same-store sales in the second half of the year, a period of historically strong seasonal sales.”
Costco said that by adapting to customer demand for some essentials, they are also able to have larger in-store displays for some other items.
Vachris said this may include “high ticket” items like furniture, backyard sheds and saunas that are “not reflective of the traditional Costco set you’ll see,” because of previous “space constraints,” he added.
Winder says that although this strategy makes sense given the consumer sentiment, it is still “a gamble.”
“Anytime you change assortment, you do take a chance that consumers will embrace those new items,” he said. “But then again, you have to keep things fresh.”
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