Comment: As tariffs looming, holiday deals may not return soon

By Andrea Felsted / Bloomberg Opinion

Make the most of this year’s Black Friday bargains. With many retailers carefully controlling their inventories — and the prospect of Trump administration tariffs on the horizon — those savings might not hang around for long.

As we approach the annual holiday bonanza, the market certainly seems awash with special offers. They started back in October, when Amazon.com Inc. kicked off its second Prime Day of the year and retailers including Walmart Inc. and Target Corp. unleashed their own barrage of deals.

But retailers have actually been more restrained in 2024. Many of the current markdowns are the product of pre-negotiated deals with suppliers or strategies designed to move major holiday volume. While there are some blanket reductions covering entire product categories or even the whole store, most don’t appear to be born of panic or inventory gluts. Companies have also been able to take advantage of deflation in setting this year’s doorbusters. Walmart said last week that for non-food items, its prices were more than 4 percent lower in the third quarter than the year earlier.

Although there have been some unwelcome surprises, such as Target’s inventories rising 3 percent in its most recent quarter, few are going into the holidays with a surfeit of stock. Walmart Inc. and Gap Inc. are enjoying the winning combination of increasing sales and shrinking inventory levels. That’s a far cry from two years ago, when most chains were grappling with a mountain of unsold goods.

Consequently, promotional activity, as measured by the number of product lines advertised as marked down on retailers’ websites, has been pretty healthy this year, according to Simeon Siegel, analyst at BMO Capital Markets.

And it looks like that discipline is continuing even as Black Friday discounts kicked off last weekend. Stacey Widlitz of SW Retail Advisors, who tracks discounting in the U.S. and Europe, found that of the top retail 25 names, the majority held U.S. promotions steady with last year, or slightly reduced them.

Shoppers, for their part, have gotten savvy about getting the best prices. Last week, Target CEO Brian Cornell told investors that customers were now being “resourceful” by waiting until the last minute to purchase, focusing on special offers and stocking up when they find them. While Target’s week of deals in October was one of its biggest yet, the retailer saw a more pronounced sales dip in the seven days before and after the event, underlining just how much consumers are planning ahead.

Indeed, one of the reasons for the fall rebound in U.S. retail sales was consumers dialing back September spending in anticipation of October deal days. As these arrived in stores and on retailers’ websites, there was a “mini-spending spree,” according to Neil Saunders, managing director of retail research group GlobalData.

Of course, shoppers will likely get a second bite of the bargain apple in January, when unsold holiday stock is typically discounted. But they may not want to wait long. Retailers are facing the prospect of tariffs under the Trump administration, primarily on imports from China, but also on goods from Mexico and Canada. Those costs could mean fewer deals and discounts in 2025.

Brands have learned to deal with adversity over the past five years, after navigating first global lockdowns, then supply chain snarls followed by soaring inflation. Lately they have faced disruption to Red Sea shipping routes and the prospect of an East and Gulf Coast ports strike. Those latest hurdles show just how well retailers are adjusting: While some companies have run into problems, overall there’s been little impact.

No matter how adept retailers have become, there will be no sidestepping the impact of broad tariffs. Corie Barry, CEO of Best Buy Co Inc., said on Tuesday that historically many of the extra costs of such measures were borne by the company and suppliers. But inevitably, some expenses would be passed onto customers.

“Buy now while stocks last!” is one of the oldest ploys to encourage consumers to part with their money. This time though, it might actually be true.

Andrea Felsted is a Bloomberg Opinion columnist covering consumer goods and the retail industry. Previously, she was a reporter for the Financial Times.