Holiday shoppers say deals are lacking

This season’s discounts, which range from 5% to 25%, are markedly lower the historical average of 10% to 30%, according to Impact Analytics and Cowen & Co.

Big holiday discounts — long integral to a retailer’s survival — are diminishing in the face of rising costs and supply chain challenges, leaving Americans without the markdowns they’ve come to expect.

Prices are higher everywhere, even online, as companies adopt more personalized strategies based on a shopper’s buying history.

Clothing brand Express, cosmetics chain Ulta Beauty and big-box retailer Dick’s Sporting Goods are among those that have pulled back on promotions. Bath & Body Works, the mall mainstay known for its “buy 2, get 1 free” deals, is limiting clearance sales and storewide discounts while raising prices on popular items like candles and “wallflower” heaters.

“We’ve been able to keep promotion levels at or below where we were in 2020 and meaningfully below where we were in 2019,” chief executive Andrew Meslow said in an earnings call last month.

Analysts say shoppers have generally cut back on impulse purchases during the pandemic, spending instead on targeted big-ticket items like home furnishings, appliances and sporting equipment. A recent rise in online shopping has also given retailers a better understanding of who their consumers are — and how to reach them — than they used to, says Christina Boni, a retail analyst for Moody’s.

“If they know you’ve got three kids, they can send you a back-to-school coupon that will motivate you to come in,” Boni said. “And if they know I love golf, why not send me a golf promotion? They can get me to come into the store without putting all golf stuff on sale.”

It’s a stark reversal from what consumers have been conditioned to expect in the dozen years since the 2008 recession. Retailers’ reliance on flashy promotions to attract shoppers quickly became a “race to the bottom,” said Milton Pedraza, chief executive of the Luxury Institute, a consulting and research firm.

Now, nearly two years into a pandemic that has upended supply chains and made it harder for retailers to secure inventory quickly and cheaply, all of that is changing. Companies “finally see an opportunity to raise prices,” he said.

This season’s discounts, which range from 5% to 25%, are markedly lower the historical average of 10% to 30%, according to Impact Analytics and Cowen & Co.

The scaling back comes at a time of sustained inflation. Overall prices have jumped 6.8% in the past year, according to Commerce Department data. Meanwhile, e-commerce prices are up a record 3.5% from last year, according to the Adobe Digital Price Index.

Yet consumers, so far, have continued to spend: Retail sales spiked 1.7% in October, even as Americans expressed concerns about escalating inflation

But there are growing signs that families are being affected by higher costs: 1 in 4 consumers said rising prices had eroded their living standards in November, according to the University of Michigan Consumer Sentiment Index.

Zarah Reeves, 20, waits all year to buy clothes, electronics, cosmetics and dorm furnishings, timing her purchases to the bargains offered in the run-up to the holidays. But this season, brands that once slashed prices 50% to 90% starting on Black Friday are sticking to markdowns of “10, maybe 20%,” she said.

“The deals are just horrible,” Reeves said. “I’m looking at these discounts, thinking: That’s it? Never mind.”