Discount Mentality May Have Stayed On With American Shoppers

January 7, 2009 7:38 a.m. EST

New York, NY (AHN) - The deep discounts enjoyed by shoppers during the year end holiday may continue to adversely affect the retail industry in 2009. Because consumers enjoyed up to 75 percent price reductions during holiday sales, store owners are wary that they have to cut prices again and reduce profits to move merchandise for spring.

Even this early, retailers Bebe Stores and J. Crew Group are considering large discounts for their spring goods to attract consumers bent on cutting corners and with reduced shopping budgets.

After shoppers experienced buying jeans at $200 a pair, many consumers are now questioning how much is the real cost of items on store windows and shelves. Michal Ann Strahilevitz, marketing professor at the Golden Gate University's Ageno School of Business, said the huge discounts had altered consumers' sense of what is fair and what a good buy is. A good bargain must take off 70 percent from its tag to be considered a value purchase.

Many consumers who used to be happy with 40 to 50 percent discounts now seek at least 70 percent price off to consider buying the item. But also, many consumers have lost their jobs and lack income, or they aren't getting pay increases while the cost of basic items, such as food, has increased. So without deep discounts they can't buy many of the things they need.

And despite the large discounts offered by retailers during the Yuletide holidays, the International Council of Shopping Centers expects sales in December to be down by over 10 percent.

Michael McNamara, vice president for research and analysis for Spending Pulse, a report made by MasterCard Advisors, said badly affected by dipping sales during the last month of 2008 were luxury goods which went down by 27.6 percent, apparel by 17.3 percent, furniture which dipped by 20 percent and electronics and appliances by 21.4 percent.