Executives from Best Buy (BBY), Ulta (ULTA), Gap (GPS) and other top chains have said in recent weeks that they expect a shopping season full of discounts. Walmart (WMT) released its annual top toys list on Tuesday and said it was offering more “rollbacks” — temporary price reductions on items — than in previous years and a wider selection of under-$50 and $25 toys.
In addition to toys, shoppers are likely to find discounts on clothing, televisions, beauty products, sporting goods, and other items.
Some chains have been piling on too much stock in recent months and will step up promotions to try to sell off the holiday glut.
Other companies are also ramping up their promotions to attract inflation-stricken shoppers who would otherwise find Christmas gifts too expensive.
“We expect it to be more competitive and promotional this year than it was a year ago,” Scott Settersten, Ulta’s chief of beauty finance, said on a conference call to analysts last week.
Best Buy executives said Tuesday its inventories are healthy, but rivals that carry surplus consumer electronics are discounting them to lure shoppers feeling pinched by inflation.
“We’re seeing a value-driven customer definitely moving more towards some of these sales events,” CEO Corie Barry said when speaking to analysts. Barry expects the Christmas shopping rush to start later in the season than it did a year ago.
“You’re going to see a holiday that’s a little bit more like what we saw before the pandemic,” she said.
Retailers are “not where they want to be in terms of inventory levels, which will require more discounts,” Jefferies retail analyst Jonathan Matuszewski said in a note to customers on Tuesday. He expects a “heavy advertising holiday”.
Although shoppers love discounts, retailers don’t love them because they eat up profits. Some chains like Kohl’s (KSS) and Gap (GPS) are instead packing away their excess inventory and planning to sell it in future seasons.
However, it’s unclear whether Christmas rebates will be compelling enough to entice inflation-conscious shoppers to buy.
A host of retailers have said in recent weeks that lower-income customers are shifting their shopping away from necessities and toward necessities like groceries and household items. Some higher-income consumers are also cutting back on their spending.
“High-income consumers, who generate a disproportionate share of spending, saw a large decline in both their current personal finances and durable goods purchasing conditions,” researchers from the University of Michigan wrote this month.