U.S. holiday shopping discounts deepen, last longer

Sat Dec 6, 2014 11:41am EST
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By Jilian Mincer and Nandita Bose

(Reuters) - Amarilis Sinchi visited Macy's at a New Jersey mall on Black Friday, but she waited until this week to purchase the red fleece pajamas she had her eye on.

The 21-year-old student ended up paying $13 at the department store, down from $30 on Friday, which has traditionally been the best day for deals during the U.S. holiday season. "The prices keep getting better," she said, planning a return to another store - Kohl's - which had dropped the price on LEGO toys.

Retailers started discounting early this holiday season, but that hasn’t stopped them from stepping up the offers now, particularly on apparel. The increasingly fierce struggle for consumer dollars online is adding to pressure for lower prices at stores, where mobile device-toting customers compare prices as they shop.

Many deals are being extended and deepened, visits to malls and data from price tracking firms show, and analysts see many retailers' margins being compressed, especially in apparel.

"We’re experiencing post-holiday promotions even before the holiday is in full swing," said Steven Barr, U.S. Retail and Consumer Leader at consultants PwC, who has not seen such a high level of deals at this stage of the season before. On one trip to a mall, an apparel store dropped a discount from 40 percent to 50 percent while he ate lunch.

“We expect this is going to be the most promotional holiday on record,” challenging profits in the sector, he said.

Consumers remain cautious about spending despite lower gasoline prices and an improved jobs and housing market, surveys by Reuters/Ipsos show. Wages growth has been very limited while food and healthcare costs have risen.

    People do generally appear to be getting more price conscious. In a survey this summer conducted by PwC, 84 percent of respondents said they chose a store because of the prices it offers, up from 74 percent in 2013.   Continued...

Shoppers enter Macy's to kick off Black Friday sales in New York in this file photo taken November 27, 2014. REUTERS/Andrew Kelly/Files