Deals, Deals, Deals: Shoppers Are Enjoying Deeper Discounts This Holiday Season

Retailers Open On Thanksgiving Evening, Starting Black Friday Sales Early
(Photo by Kena Betancur/Getty Images)
Photograph by Kena Betancur—Getty Images

If it feels like the deals are deeper and more plentiful this holiday season, it’s not your imagination.

Even though major retailers were much more careful to avoid over-ordering after last year’s hyper promotional Christmas season, shoppers are winning their game of chicken with stores, holding out for even bigger deals than last year.

“It’s a race to the bottom,” Charles O’Shea, a retail analyst at Moody’s Investor Service told a media briefing on Wednesday. “This huge cycle has been fueled by the big guys.”

Earlier this week, Neiman Marcus Group Chief Executive Karen Katz told analysts that the retail environment was more promotional this year, echoing laments from other retail CEOs in recent weeks.

Here’s a data point that backs that up: data firm DynamicAction which analyzed $4 billion in online transactions, and found that 67% of orders placed online in November used a promotion, up from 38% last November. This will come as a surprise to no observers: (AMZN) started its deals earlier this holiday season, and the likes of Best Buy (BBY), Target (TGT) and Walmart (WMT) were similarly aggressive in keeping pace.

After the Black Friday/Thanksgiving weekend, the National Retail Federation released a survey that found shoppers spent $289.19 over the four-day weekend through Sunday compared with $299.60 over the same period a year earlier, with the drop attributable primarily to discounts. What’s more, the NRF estimated 108.5 million Americans shopped online over the four-day weekend, compared to 99.1 million shop visitors. The proliferation of mobile apps has made it easier to compare prices, adding to the pressure to offer good prices.

And that appears to be continuing as the holiday season winds down. As the Wall Street Journal reported on Wednesday, only two (Ulta Beauty (ULTA) and Gap Inc (GPS)) of the 21 retailers tracked by analyst Simeon Siegel of Instinet were less promotional during the first weekend of December from a year ago.

Big stores like Macy’s (M) and Kohl’s (KSS) have made it a point to be more cautious in ordering merchandise lest inventory levels get too high in related to sluggish sales. That might reduce potential carnage from having to sell items at clearance prices after the holidays.

But the appetite for discounts is apparently here to stay. “That’s the U.S. shopper’s psyche- everyone wants a deal,” O’Shea said.


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