Retail executives, federal pricing data, and an exclusive analysis of early Black Friday discounts all point to the cheapest holiday shopping period in years for TVs, dresses, toys, and sporting goods. The battleground for retailers this U.S. holiday season is over merchandise priced at $35 and less.

According to data from the Bureau of Labour Statistics (BLS), costs for sporting items are declining this holiday season for the first time since 2018, while toys, games, and hobby gear are expected to be less expensive for the first time since 2020.

According to BLS data for October, the cost of a TV is now three-fourths less than it was in 2019, while the cost of men’s suits, outerwear, sports coats, women’s outfits, and audio equipment is between 8% and 14% less than it was before the epidemic.

Consumer prices are starting to decline following two years of rising prices for almost every consumer commodity, from eggs and butter to Barbie dolls and tennis rackets, due to supply chain kinks brought on by the epidemic and a significant shift in demand towards things over services.

Prices for general products, such as apparel, electronics, and furniture, have decreased by low to mid-single-digit percentages from the previous year, according to Walmart. This has allowed the store to lower prices for the upcoming Christmas season.

Executives at Target stated that although inflation has moderated, the current climate is still quite “rational.”

“If there’s one thing that we’ve seen is in an environment where people are making choices and they might have some constraints with their budget, the motivation to buy is, really, is this going to add value to my life?” Target chief growth officer Christina Hennington said on a call last week.

Major retailers provide Black Friday discounts of 30% to 50%, with the possibility of further reductions later in the season. A lot of people might put off buying their gifts until the weekend before Christmas Monday. According to analyst Jessica Ramirez of Jane Hali & Associates, retailers may increase their discounts by 10%.

“We are definitely seeing signs that the consumer is starting to pull back … and businesses know that,” Jeffrey Roach, chief economist at LPL Financial, said in an interview. “So they’re putting their best foot forward by trying to put fairly aggressive discounts.”

Dolls, Lego sets, winter apparel, baby items, and Christmas decorations were all priced at or under $35 during Walmart’s Black Friday sales.

More than two-thirds of Target’s holiday toy assortment will be available for $25 or less, and a comparable proportion of its holiday decorations will be priced at $30 or less. Barbie dolls and other toys were less expensive than in 2019.

On Target’s website, for instance, a Barbie doll Clinic Play Set was listed for $32.49 on Wednesday. In contrast, a Reuters investigation using the Wayback Machine online record revealed that the playset was selling for $45 on December 3, 2019, and November 18, 2021.

A Lego creative brick box from the classic line was available for $22.49 on Walmart as of Nov. 20, 2019, the day before Thanksgiving.

Jane Hali & Associates reports that merchants, including as Dick’s Sporting Goods, Macy’s (M.N.), and Lowe’s, have expanded their price reductions to a wider range of categories than they did the year before in the weeks preceding Black Friday.

This year, Macy’s offered discounts of up to 50% off on handbags, small appliances, and men’s shoes in addition to 50% to 65% off coats and dinnerware. During the week of November 8, the department store chain offered 12 promotions as part of its “Black Friday Early Access” sales event, as opposed to just 4 the previous year.

Macy’s and many other large chains, including dollar stores, are having trouble with slower inventory drawdowns, according to Reuters’ review of inventory data.

Tremendous e-commerce sites Temu and Shein have also joined the offers bandwagon and are indulging in a “value for money” craze, which is causing a pricing war.

Walmart, Target, and Home Depot (HD.N) are exhibiting caution when it comes to the health of their customers, according to Kevin Simpson, chief investment officer at Capital Wealth Planning, and he added that once the season is over, lower earnings reports may be forthcoming.

He claimed that despite price increases, “retailers have been in a Goldilocks world” for the past two years of growing sales. “But you can only do that for so long.”

This year, he anticipates that merchants will offer greater discounts. “There will be a reduction in sales and a compression of margins,” stated Simpson, whose company has shares in Home Depot and Walmart.

(Adapted from Reuters.com)

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