Visitors stroll past a store on the Third Street Promenade in Santa Monica, drawn in by an eye-catching 50% off sign that captivates shoppers. However, a recent report reveals that many consumers are experiencing “discount burnout.”
A survey by AlixPartners, conducted with over 9,000 U.S. shoppers across various retailers, shows intriguing trends. Shoppers now view price hikes as inevitable, meaning discounts aren’t as enticing as they used to be. In fact, the importance of price dropped by 13% compared to last year. Even in off-price retailers, fewer consumers—30% less—consider sales critical.
According to Sonia Lapinsky, who leads the financial consulting firm’s fashion practice, this change is partly due to past events like President Trump’s tariffs. Retailers used heavy discounts to calm fears about rising prices. But now, consumers are fatigued by promotions and want more than just a good deal; they seek consistent pricing and quality.
Interestingly, despite an uptick in foot traffic, shoppers are spending less time in stores—about 3% less—and their basket sizes have dropped 5% over the last two years. Lapinsky noted this disconnect: higher traffic but lower sales. What’s lacking in the shopping experience? That’s the question retailers need to address.
The upcoming holiday shopping season looks uncertain, partly due to weakening consumer sentiment, job market concerns, and ongoing inflation pressures. Retailers are focusing on product quality and a strong brand presence. Discounts no longer suffice for driving consumer interest. Lapinsky warns that this reliance on discounts may backfire, particularly with new tariffs prompting price raises.
A cautionary example lies in the luxury sector, where brands like Chanel sharply increased prices over recent years—one of their bags jumped from $5,800 to $11,300—a change that caused some consumers to seek out more reasonably priced alternatives.
As consumers look for value, retailers must adapt to these shifting priorities. In an age where shopping experiences matter as much as products, brand loyalty could hang in the balance if retailers can’t meet expectations. As we move toward major shopping events, the insights from AlixPartners serve as vital pointers for both consumers and retailers.
For more insights on consumer behavior and retail dynamics, check out this report from AlixPartners.
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