A Break in Holiday Discount Fever?

If you’re looking for $3.00 toasters and coffeemakers this holiday season, you may be out of luck. According to our fifth-annual Retail Compass Survey of CMOs, discount fever has subsided somewhat this year. Sixty-four percent of CMOs expect to see more discounts and promotions this holiday season, a notable decline from 2009 when 96 percent said they planned more markdowns. More than one-third (36%) do not anticipate additional discounts and promotions this year.

Consumers can still expect to see healthy price cuts this year as retailers continue to focus on getting shoppers in the door. What product categories will see the most discounts? Similar to 2009, most (43%) of CMOs point to consumer electronics. The cutthroat discounting in electronics comes as retailers and manufacturers alike deal with oversupply issues and look to move that inventory off shelves. iSuppli projects 32-inch flat screens will sell for as low as $199. But stores may have a tough sell to consumers who purchased those big ticket items during the discount frenzies of 2009.

Other product categories where CMOs expect to see the most discounts include: apparel (30%), jewelry (14%), toys (6%) and lifestyle goods (3%). Fewer CMOs (4% v. 14% in 2009) expect home goods to see the most discounts, a sign that shoppers are moving beyond practical gift items.

While it’s clear that discounting is still important to retailers’ success this holiday season, consumers shopping dollars have loosened a little, and stores will also look to focus on product variety to drive sales. In fact, 31 percent of CMOs noted that they planned to increase SKUs for the holiday season.

Overall, our survey suggests that retailers may have turned the corner on the bargain-basement prices seen in 2009. Retailers will likely look to create more of a balance this year, slightly scaling back on excessive discounts and targeting more promotions in stores.

What’s your take on discounting this season? Do you think retailers are scaling back?