U.S. consumers should expect fewer discounts during the holiday season due to high transportation and material costs, supply chain disruptions, labor shortages as well as growing inflation, experts told The Wall Street Journal Monday.
Executives and experts told the WSJ that consumers should be prepared to pay full price for goods during the holiday season. The spike in prices has allowed companies to offset higher transportation and material costs.
Proctor and Gamble announced Tuesday it is raising prices on several home goods due to a sharp increase in freight transportation and raw materials, The Daily Caller News Foundation reported.
The number of out-of-stock signs online increased 172% compared to January 2020, according to Adobe, the WSJ reported. Apparel saw the biggest increase in out-of-stock messaging, followed by sporting goods, baby products and electronics.
Retailers’ newfound pricing power is making some customers think twice about their holiday shopping plans https://t.co/O1t7A1cOAj
— Jennifer Smith (@jensmithWSJ) October 25, 2021
Holiday season discounts are projected to be between 5% to 25%, compared to the historical average of 10% to 30%, according to the WSJ.
“This year’s promotional levels have been lower than historical levels, and we’ve been thoughtful about the categories that need promotion, Adrian Mitchell, Macy’s finance chief, said at an investor conference on Sept. 9.
“We’re already quite pleased with the fact that we’ve been able to really pullback on discounting in all of our brands,” Katrina O’Connell, Gap’s chief financial officer, said, according to the WSJ.
The consumer price index increased 0.4% in September, bringing the key inflation indicator’s year-over-year increase to 5,4%, the highest level since Jan. 1991. Experts surveyed by the WSJ believe that high inflation will last well into 2022, indicating supply chain disruptions will keep raising prices and limiting production.
Companies like Walmart, Costco Wholesale and Home Depot have experienced low inventory due to supply shortages, which has helped reduce overall discounts, the WSJ reported.
“We would take even more inventory if we could get it, especially in some categories,” Walmart’s Chief Executive Doug McMillon said, according to the WSJ.
Walmart, Home Depot and Costco Wholesale did not immediately respond to The Daily Caller News Foundation’s request for comment.
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