A side effect of the Covid-19 pandemic for the holidays: Fewer bargains for shoppers.
Industry executives and analysts say consumers should expect to pay almost full price for a variety of products this holiday season, such as Nike sneakers, Coach handbags and Ralph Lauren polo shirts.
According to executives and analysts, there are several factors behind the lack of transactions, including back-up supply chains, inflation and measures to help retailers price their products more efficiently.
For retailers, the newly discovered pricing power is boosting profits, when sales are still recovering from the pandemic after a massive spate of discounts and deflation. It even makes some customers think twice about their holiday shopping plans.
“I’m definitely going to cut back on purchases this year, and every time I go to a store, the price goes up and my budget goes down,” said Michelle Keldogord, who lives in Redlands, Calif. lives.
A 28-year-old blogger said she’s having a hard time finding items on the list and is considering taking her two kids to Disneyland this Christmas instead of buying presents. This includes a Lego Friends set for daughters and a Fortnite battle bath for sons, as well as clothing, jeans, and pajamas.
According to Adobe, there has been a 172% increase in the number of online out-of-stock messages compared to January 2020. Ltd.,
Track access to retail websites and product categories. Of the 18 categories Adobe is tracking, apparel currently holds the highest stock level, followed by sports equipment, baby products, and electronics.
Adobe expects discounts to go up to 5% to 25% over the holiday season, down from the previous 10% to 30% range.
“This year’s promotion level is lower than before, and we have carefully considered the categories that need promotion,” said Macy’s Adrian Mitchell. of a corporation
the chief financial officer told investors in September.
At the same investor conference, Gap Inc. Katrina O’Connell, the company’s chief financial officer, said: “
Retailers also refrained from offering discounts last year as many chains were headed for low-inventory seasons due to a pandemic-fuelled shortage. Also, shoppers who are wary of Covid-19 are more likely to make a purchase when they try to enter the store.
Before the pandemic, many retailers increased the discounts offered during the holiday season almost every year. This allows customers to wait for a transaction before making a purchase. For some chains like Gap and Home Depot Ltd.,
Efforts to keep shoppers away from discounts have been a long battle.
Home Depot has shied away from promotional prices for years, officials said, and the pandemic helped fuel those efforts. But at an analyst meeting in September, CEO Craig Menear said a decades-long tradition of higher or lower prices depending on sales of products like home appliances. It was difficult to break it.
Big Retail Executives, including Wal-Mart Ltd.,
Costco Wholesale Ltd.
And Home Depot said it would be nice to have more inventory to sell, but a lack of adequate supply helps reduce discounts.
Wal-Mart’s inventory levels have risen compared to 2020, CEO Doug McMillan said at an analyst meeting in September. “If we can get that, we’ll get even more inventory, especially in certain categories,” he said.
The average discount rate for men’s clothing purchased over Labor Day weekend through online discount market Brad Deals was 54% this year, compared to 71% a year ago. The discount on shoes has come down from 62 per cent last year to 51 per cent this year. In addition, an average of 31% discount has been given this year on sports, fitness and camping equipment from 50% last year. Each of these categories had less publicity this year than in 2019.
Prices for women’s clothing have increased, but deals in electronics and home goods have remained the same in the past two years.
Overall, Casey Runyon, editor-in-chief of Braids Deals, said she expects discounts to continue to dwindle until the holiday season. “Promotions can be strategically placed on products that retailers are overstocking,” she said. “These items may not be at the top of a buyer’s holiday wish list.”
There’s a dichotomy to this year’s discount, said Shimon Siegel, an analyst at BMO Capital Markets. “Shoppers have to spend money on popular items, but they will find transactions for the items left behind,” Siegel said. He expects discounts to be most prevalent for seasonal items arriving late in stores and warehouses due to unprocessed ports.
In the first few weeks of October, the proportion of goods sold under some of the brands they are tracking decreased by 5% compared to the same period last year. The biggest drawback was the promotion of Nike and Adidas products sold in Foot Locker, with discounts of around 30% for both brands. Coach, Ralph Lauren and Michael Kors products sold at Macy’s also had lower discount rates.
Supply chain disruptions are the main cause of product shortages, but some brands either reduce the amount of products they sell or use data to better promote specific customers before and during the pandemic. We do. By targeting precisely, we set the price of the product more strategically.
“Previous advertising methods were inefficient,” Levi Strauss CEO Chip Berg told The Wall Street Journal’s Tech Live conference last week.
Macy’s Chief Financial Officer Mitchell told analysts in August that the company was using more science to price. He said this helped to reduce and simplify the depth of propaganda. Mitchell said lean inventory levels help the chain maximize the amount of merchandise it can sell at regular prices.
What is good for retailers is not necessarily good for consumers.
Ryan Zamo is a bargain hunter. However, the 32-year-old owner of an organic skin care company said he hasn’t found many deals this year. “Even if there is a sale, what you want is not in stock or has been backordered,” said one Los Angeles resident.
— Sara Nassauer contributed to this article.
write in Suzanne Kapner at [email protected]
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