Retailers are dangling big sales well ahead of Black Friday, a reversal from the past two years when scarcity allowed stores to charge full price for many products, from sweaters to washing machines.
The deep discounting, which started in October, could weigh on retail profits as chains enter the year-end shopping rush, analysts said. The pressure is particularly acute for apparel retailers, which have started to lower prices despite inflation.
Gap Inc., American Eagle Outfitters Inc., Victoria's Secret & Co. and Under Armour Inc. each said their prices on average were lower over the summer than during the same period in 2021. American Eagle said its average selling price was 4% lower in three months ended July 30 than during the same period a year ago.
"We do expect the higher discounting and promotional activities kind of given the evolving market conditions," David Bergman, Under Armour's finance chief, told analysts in early November.
But he said he didn't expect prices to dip below 2019 levels.
Apparel was the only category out of nearly a dozen where prices are lower than last year after factoring in discounts and deflation, according to DataWeave Inc., an analytics company that tracks online prices for thousands of items across retailers.
Apparel prices on average fell 3.3% from January to October, compared with the same period in 2021, DataWeave said.
That deflation coupled with promotions offered by retailers meant that consumers paid roughly 5% less for clothing they purchased in October, compared with the same month in 2021.
By contrast, inflation pushed up prices for appliances, beauty products, electronics, furniture and toys over the same period. For the most part, the discounts offered by retailers in those categories weren't enough to offset inflation, meaning that consumers are still paying more for them than they did a year ago.
"Apparel prices went up at the beginning of the pandemic due to inventory scarcity," said Simeon Siegel, a senior analyst with BMO Capital Markets. "But most apparel companies are seeing pricing pressure now. Even though their costs are up, retail prices for apparel are deflating."
Martha Shaughnessy, 43, a publicist who lives in San Francisco, recently took advantage of a sale at Saks Fifth Avenue to snap up a dress for herself and sweaters for her aunt and mother-in-law.
Her husband bought two sweaters at Lands' End that were 30% and 50% off.
"We're not even at Black Friday yet and the prices are so good," said Ms. Shaughnessy.
Overall, consumer prices rose 7.7% in October compared with the same month last year, down slightly from recent months but still near a four-decade high.
Before the pandemic, apparel retailers, particularly department stores and other mall chains that were struggling, had gotten shoppers hooked on discounts.
Those that tried to eliminate promotions, like JCPenney under former chief executive Ron Johnson, were punished by shoppers.
The pandemic offered these retailers a respite of sorts. The temporary factory closures, shipping delays and other supply-chain problems that kept goods in scarce supply over the past two years helped them break the cycle of overbuying and discounting that had eroded profits for decades. But the interlude was short lived.
"Twelve to 18 months ago, discounts almost went away," said Brad Wilson, the editor in chief of Brad's Deals, an online discount guide. "Last year, if you needed something, you didn't wait and shop around for a lower price, because it wouldn't be there -- it would sell out. This year, it's a 180-degree change."
As the supply-chain bottlenecks eased this spring and people shifted their spending to travel, dining out and other entertainment outside the home, clothing piled up on retail shelves, leaving stores with excess supply that they now must promote to clear out.
Of 150 U.S. retail executives polled in September by the consulting firm Accenture PLC, almost all said they had increased promotional activity during the holiday season. More than a third said their companies are using deep discounts to unload excess stock.
Mr. Wilson said the discounts he is tracking are deepest on clothing.
"I can almost feel the desperation of retailers there," he said. "These discounts aren't typical for early November."
Benson Gitau, 36, a security engineer in Houston, recently bought sweaters on sale at American Eagle, and jeans for his wife at Express Inc., where they were on sale for 60% off.
"The discounts are definitely bigger than a year ago," Mr. Gitau said.
Tom Martin, 45, a private wealth adviser in Hartford, Connecticut, recently loaded up on hoodies for his two sons at Target Corp., where they were selling for $6 each.
He also took advantage of sales at Gap, and Hollister Co., where T-shirts and other items were 40% to 60% off.
Mr. Martin said the prices are so good that he is buying extra clothes for his children in larger sizes that they can grow into.
"These are the types of sales you usually see on Black Friday or Cyber Monday," he said.
