Bargain hunters will be unhappy this holiday season, as retailers hold back on discounts
Category: News & PoliticsVia: perrie-halpern • 3 months ago • 13 comments
By: Leticia Miranda
Amid a supply chain crunch and shipping snarls that have kept retailers scrambling to keep shelves stocked, shoppers panicking about not finding enough gifts will face another shortage this season — deals.
Across the board, retailers including Best Buy, Kohl's and Macy's have limited the number of discounts at their stores as billions of dollars of merchandise sits on container ships at American ports.
Rising prices, increased disposable income driven by stimulus money and record retail bankruptcies have also led retailers to roll out fewer promotions, according to company earnings calls and retail analysts.
"Our goal is not to accelerate in promotional activity, but we'll also see where the landscape goes and make sure that we're continuing to gain share," Ulta Beauty CEO Dave Kimbell told investors last month. "But we won't be leading promotional activity."
This year's promotional levels have been at historic lows, Macy's Chief Financial Officer Adrian Mitchell told investors in September. The company is focused on items with higher average price points, he said, adding that Macy's has "been more thoughtful about the categories that need promotion."
Holiday spending is expected to grow by as much as 10.5 percent, compared to 2020.
According to recent forecasts from the National Retail Federation, holiday spending is expected to "shatter previous records," with sales growing between $843.4 billion and $859 billion, an 8.5 percent to 10.5 percent growth rate from 2020. While much of this growth may be attributed to retail's emerging pricing power, it is shaping up to be a heavier hit on shoppers' wallets as they head in to the holiday season.
"Retailers will be careful to manage inventory based on shortages as well as oversupply," Marshal Cohen, retail chief industry adviser at NPD market research firm, told NBC News in an email. "Look for promotions to match last year's, just not as big or with as many deep discounts. As long as consumers spend early, retailers will promote less."
Already, shoppers have been paying more. This year, Labor Day and Memorial Day sales saw price drops of between 2 to 7 percent across electronics, toys, and furniture and bedding — a slim discount compared to 2020 and 2019 when prices dropped by between 5 and 11 percent, according to Adobe Analytics.
"You will find retailers look at early signals of how consumers are shopping to see about pricing," said Rod Sides, Deloitte vice chairman and lead of the firm's U.S. retail and distribution practice. "We will see how inventory plays out and retailers might cut back on promotions because of inventory."
As long as consumers spend early, retailers will promote less.
Matthew Shay, president and CEO of the National Retail Federation, told reporters in a media call Wednesday that despite ongoing supply chain challenges, retailers are prepared for the holiday season with plenty of inventory. Retailers are focused on nudging shoppers toward in-stock items when they find an item they were looking for is no longer available, he said.
Still, retailers have announced holiday deals at a rapid clip well before Halloween even took hold. Walmart already ran two Black Friday ads, which include deals on Apple AirPods, Roku streaming sticks and Lego bricks. Kohl's recently announced its holiday sales campaign and already wrapped an early holiday shopping event last week that included deals on Ninja kitchen appliances, Vans sneakers and Calvin Klein intimate apparel. Lowe's announced the Season of Savings event, which began Thursday, where it plans to drop new savings every week.
But this year, promotions may not be focused across a broad sector of items or free shipping but price matching guarantees, said Kristin McGrath, shopping editor and expert at RetailMeNot, in an email to NBC News.
"Take Best Buy as an example — these are promos that allow shoppers to get a refund of the difference if something they bought early goes on sale for a lower price before Black Friday," McGrath said. "Whereas, in the past, retailers enticed shoppers with free shipping, this year, they're trying to instill confidence in early shopping."
Target is also offering price matching. Between now and Dec. 24, shoppers can request a price match if the price of a purchase goes lower later on at Target.
Shoppers have already begun to refine their shopping strategies to nab deals while they are available. Marvinette Hale, a professional discount shopper based in Hanover, Pennsylvania, told NBC News that more shoppers are staying up until midnight stalking deals online to scoop up a discounted item before it's gone.
"The wow factor deals are just not out there anymore, especially right now," she said. "I definitely do think people are looking for discounts now and trying to save more money."
Instead of coupons and browsing online and in-store sales, she's leaning more on rewards credit cards to get deals and gas discounts.
"Always by now you're hearing about that one hot toy — and you're not even hearing about that right now," she said. "It's dead."