Is This the Year Discount Mania Finally Ends?

0:07Hello and welcome to The Debrief from the Business of Fashion, where each week we delve into our most popular BOF professional stories with the correspondents who created them. I'm executive editor Brian Baskin. And I'm senior correspondent Sheena Butler-Young. And this is The Debrief's Holiday Retail Spectacular. Today we're going to talk about what fashion and beauty brands are planning for Black Friday and whether it'll be enough to lift consumer spirits. And we'll also talk about how this is the most wonderful time of the year for luxury department stores, while most of them. Joining us to help decode this season's shopping trends are BOF reporters Kat Chen and Malik Morris.

0:44Kat, Malik, welcome to The Debrief. Hey guys, thanks for having us. Thanks for having us. Glad to be back. Glad to have you both back, our retail experts. First questions to you, Kat. Set the scene for us a bit. The American consumer is in a really weird place right now, right? Yes, things are a bit funky right now. I'm sure everybody has seen the headlines about consumer sentiment. Every week there's a new report out about how crappy people are feeling about the state of the economy. Today there was a new report out from the conference board that consumer sentiment has slipped, I think, another six points from the month prior.

1:28And so people are not really feeling rosy about the state of the economy, but the irony is that they're still spending money. So the question is whether this holiday season is going to be successful for retailers because it's a very, very important quarter for the entire industry. So explain that dynamic though, because one would think if consumer sentiment, how they're feeling is at its worst level, I think it's worst level ever close to it by some measures, you would think that would translate into lower spending, but we've been seeing the opposite. Typically, spending and sentiment correlate with each other.

2:12But since COVID, there's been some discrepancy. And we've been reading and studying on this. And, you know, there was this great Planet Money podcast that you circulated with the newsroom. And the theory is that even though sentiment is down right now, spending has been driven by the wealthier segment of the economy. So these are consumers that have been insulated by a very strong stock market and real estate that's appreciated immensely in the past five years. So they have been comfortable to spend insulated from inflation and the effects of tariffs. And so they're continuing to spend, even though the bottom half or rather the bottom 80 percent of the economy are really feeling the effects of slower wage growth.

3:15And of course, in certain categories of clothing, prices have just skyrocketed since COVID. So Malik, how do retailers read something like this for Black Friday? Certainly everyone can't cater to the 1 % with their holiday deals. They've got to do something to get that bottom half of the consumer group spending again. So Black Friday, Cyber Monday is not a fix for a mediocre year. This year is really kind of like any other time where you really have to fight to get consumers' attention. And slapping, you know, a 50 % off everything discount on a photo and putting that on Instagram is not going to cut it this year.

3:55You really have to say, well, this is why you need to stop scrolling and shop with us. I'm telling you, the approach that brands are taking to this murky, you know, economic environment where the bottom half of consumers are incredibly cautious about where they're spending. I mean, they are still spending, but like they're very, very discerning is to say, here's why our brand matters. It's kind of similar to what I often say is like, it really just comes down to like good brand building. And obviously there's going to be winners and losers, but the one that can make people shop even during Black Friday when there are discounts are those that can make people understand why they should be buying their products to begin with.

4:35What are some brands that are doing a good job of that right now? We're recording this on Tuesday, November 25th, and Abercrombie and Fitch just reported their results and they were really, really good. and they even raise their guidance for the rest of the year. And that's the kind of brand I would think would get clobbered in an environment like this, where people would just say, I'm not going to spend$50 on jeans at Abercrombie. I'm going to go to TJ Maxx and spend$25. And instead, the opposite is happening. Are there other brands that are sort of defying the odds and doing really well in this tough environment?

5:06Something that I've seen and been talking to brands about is this idea of still introducing newness during this time. Like the brands that I've spoken to and I said they because these these deals are happening earlier and earlier. So some brands are starting their Black Friday deals in the beginning of like November. Some are even doing it like right after Halloween or around Halloween. And so they have some early data to go off of. And I've seen a few that have introduced new products specifically for this time tied to like really, you know, cool brand marketing campaigns as well. And that seems to be working because, again, it's about creating a sense of urgency to buy something right now.

5:47And if you're like, oh, here's this new product that we've introduced, rather than like this thing that's been sitting on the shelf that's been collecting dust. Now's the time to buy it. It's like, no, here's something that's really fresh, that feels really fun. And also, I've seen a lot of brands that say that they're doing well right now with Black Friday, you know, ahead of the actual weekend, is that they're prioritizing hero bestselling products. Like, here's a good time to get the thing that you've been comforting for a while right now when there's a deal, rather than like, here's us just trying to offload a bunch of inventory that we overpurchased, you know, earlier in the year.

6:23Where does the price cutting fit into the equation right now? Because retailers claim to not be doing that. They're going to offload things full price and offer something special. But it doesn't look like that in my inbox or my text messages. So what consumers want is value. They want to see the best price for the best value. And they don't necessarily want to see a cheap product either. They don't necessarily want to pay a low price for a good product. They want to get a good deal, but they don't want to buy a cheap product, if that makes sense. And so I feel like the days of like, we're going to do all these markdowns and then like, it's going to be like a week of 80 % off.

7:15I feel like maybe that mentality is changing. I feel like going into 2026, there's going to be more sophistication around price architecture of truly surgically pricing each product. so that at retail, before markdowns, retailers are going to get the best margin for each product that matches consumer expectations while at the same time protecting their profit margin. And so I think that there's, even on the consumer side, the sale mentality is maybe waning a little bit. Because personally, I don't want to wait for the sale and I don't want to, every Black Friday, have to look for the deals and do that.

8:09I want to buy the product when I need the product. And I think that it's exhausting for the retailers as well. And also the technology is out there. This is what AI is able to achieve. I was just going to bring that up. Go on. Right? Like this is what AI is meant to do is price products like perfectly. And so sales and like this huge bonanza of Black Friday, which by the way, even before AI, I think this was in the conversation. And so like, I don't think this conversation about value is necessarily about promotions anymore. Which, by the way, you know, Brian, you talk about Abercrombie, but Abercrombie is doing really well.

8:57But so is TJ Maxx, a company that doesn't do sales around Black Friday, you know, and Quince, you know, a company that Malik has done amazing reporting on and also doesn't do sales on Black Friday. So it's, you know, it's all very counterintuitive. I'm curious to hear your thoughts, Malik, on this thing we say and retailers say that, you know, they've been saying it for a while, that the consumer is looking for value and that that definition is evolving. Then I go to the mall on Friday and I see people wrapped around the block and looking for the biggest sales sign they can find. What's your take on reconciling those two things?

9:36Well, I mean, I think we're in the age of curation. and so even when people are expecting deals they don't want to feel like they're just getting slop and ibi to kat's earlier point like we also are coming off of all the tariff you know mania and that means margins are pressured so like brands actually can't play a race to the bottom game with discounts this year and i'm pretty sure there are those that are going to be doing rock bottom pricing or like in incredibly steep discounts but a lot of them aren't what's happened with So they've had to reconfigure their supply chains. So they've been able to inventory manage and plan better going into Q3 and Q4.

10:15And going back to my earlier point of being able to introduce new products because they've been so surgical and how they're laying out the foundation for their selling this year. So they're not really just looking to get underperforming SKUs out the door. and yeah so again i feel like that coupled with the fact that consumers want things to feel curated even if they are looking for a deal means that it's not going to just be like a free-for-all let me just throw products at you it's 90 off you know they're even doing things like introducing gift for purchase i'm not sure how prevalent gift for purchase were before this year but that seems to feel relatively new um and also early offering early access for black friday cyber monday deals to their top customers.

10:57It's trying to make it feel exclusive at a time when everyone is offering discounts because you can go anywhere in the world through e-commerce or anywhere, you know, physically in your town to like find a deal during this time. So it's all about like what is going to get me to come to you. So yeah, I think it's a confluence of things to make consumers feel special during this time and to make things feel edited, whether it's the discounting cadence itself or the product that's being offered on sale.

11:27We'll be back with more of The Debrief right after this.

11:35We've been mostly talking about mid-priced mall brands, for lack of a better word. Luxury is in a completely different headspace when it comes to discounting. Most of them don't do it, and they certainly aren't participating in Doorbuster Black Friday deals. Kat, you just wrote, though, about what luxury department stores and other multi-brand retailers are doing for the holidays. Why don't you tell us a little bit about how they're approaching these questions that we've been raising? Well, sure. So the luxury department store space going into the holidays this year is an interesting time for them, not necessarily because of the economy, but because of the circumstances in this space right now, because of the particular players in this space, namely Saks Global, Essence, and Luis Sevilla Roma, and the challenges that these players have faced this past year.

12:31Saks with various restructuring after its acquisition of Neiman Marcus and Bergdorf and vendor challenges that goes back to 2023, Essence, bankruptcy, Luisa Villaroma, filing for court protection in Italy. They have opened up white space for their competitors on healthier financial footing to come in and basically eat their lunch and acquire their customers, acquire their sales. And that will be very, I think, intense in this holiday season. And so their competitors are ramping up tactics to acquire a bigger slice of their competitor's pie. And so it's ramping up clienteling. I think that's the biggest tactic.

13:29I mean, all of these luxury retailers already were prioritizing clienteling. So courting these VICs, very important customers, very, very wealthy top shoppers. The luxury brands were already doing this, right? So as aspirational shoppers were pulling back, they were courting the rich people who were still spending money on expensive things. But now it's a matter of, okay, well, Sachs, Neiman Marcus, facing some turmoil, stealing their top shoppers, stealing their stylists, their sales associates, and then with them comes their Rolodex of top clients, right? And then throwing these lavish events in order to court those customers.

14:19And then also talent, hiring executives, not poaching because there were maybe poaching, but there were shakeups at the top level and then hiring those talent. So if we think of consumers, you know, a lot of economists are calling the K-shaped recovery to the pandemic where the wealthy are just zooming higher, spending more and more and everyone else spending less and less, or they're spending power just isn't keeping up. It sounds like the department stores are really going after that top leg. And we're talking like the real top of the top here. I've certainly never been contacted by one of these clienteling sales associates, despite my lavish spending at these stores.

15:04Is that right? Yes. It's not us. It's not. So I mean, this is like the top 20 % of consumers buoying the economy. We're talking about like the top 0.1%, maybe even less than that. And by the way, I haven't had a chance actually to mention the beneficiaries of their competitors struggling, but so some of them are Bloomingdale's, My Teresa, Forward, which is owned by Revolve Group. And I didn't get the chance to talk to Shopbop or Nordstrom, but they were mentioned by my sources as well. Okay. But I mean, Nordstrom, I mean, I'm sure they have clienteling, but they have tons and tons of regular folk customers.

15:50I mean, what are these stores? They can't exclusively rely on the same 20 billionaires to support them all. I mean, they must be doing something for the masses, right? Or at least the upper middle class of the masses. I saw Malik nodding his head. Did you have some thoughts there? No, I mean, I was just going to say that, you know, Nordstrom specifically is, they're very curated specifically when it comes to footwear. So like just selection is so good. And also they're really good partners to like their brands, you know, so like they get really good inventory. So another good thing that they do, and Kat speaks more to this, is like online, they'll like introduce like drop shipping.

16:27So like brands can like play with, you know, what can sell and see if it does well and then kind of delicit if it doesn't do it. It's just like a lot of flexibility. And I think that that just offers the end consumer a better experience. If brands feel comfortable with them as a partner and feel good and like there's room to experiment as well. I'm sure Kat has more thoughts, better thoughts on that. No, you bring up such a good point. I think every retailer is doing more dropshipping right now. But on the point of brands on vendor relationships, so that has been a very critical weakness of Saks.

17:05And when I was doing reporting on the story about how other retailers are stepping in, you would think that vendor relationships would be an easy area where competitors are like, okay, easy, I'm going to come in and be better partners. And many are. I often hear that Bloomingdale is a great partner, but way smaller in footprint to be able to replace the volume of a giant like Sax, right? But at the same time, it's like there hasn't really been a big change really in the standard of how retailers treat brands. If anything, the refrain that I've heard is that overall, the way that Saks has just been irresponsible with payments has given license for other retailers to pay their partners late.

17:59And that hasn't changed. And the reason that this matters, I mean, obviously it matters to the brands and their finances, but the reason this matters for retail generally is if a department store is nice to brands, they're probably going to get better products from them. First dibs on the great, you know, hero product of the holidays. And then if I'm a customer, I walk in and even if I don't have my Nordstrom approved personal shopper, I'm still going to go, Hey, wait a minute. This is like pretty good stuff. I'm going to shop here. That's, that's the goal, right? Yes, exactly. And not just the hero product, maybe more importantly, the new products.

18:32Because when a, when a brand gets paid faster by their retail partners, they can, they can pay their vendors, their factories faster, right? So then they get the stuff faster and then they deliver the stuff to their retailers faster. And then us, the customers, we can, you know, we will see the new stuff and we're like, oh, new cashmere sweaters and then new dresses. And then we will be inclined to go to those stores more often, right? And so like the entire ecosystem is more robust if only the retail partners were just nicer to their brand partners. And so right now, that relationship between retailers and brands, that relationship isn't great.

19:17And it's not just Saks, right? Saks has been the poster child of bad partner. But what I've heard is that it's not just sex. A lot of partners are not great. Some partners are amazing, but there's a lot of things, very little things that many retailers can step up and doing, whether that's just being better at promoting their brands, whether that's sending emails to their customers when a new brand partner's being onboarded. There's a funny anecdote that's the kicker of my story, which is that founder of a brand, the CEO, she was like, it would be nice if my brand partners would just post about us on their Instagram pages.

20:03There's another wild card also that was going to affect the brands and the retailers this Black Friday and Cyber Monday, and that is AI. I know we talked about earlier using it for sharper pricing, but there's also going to be a chance that customers use it for their shopping experience. Malik, you were on the debrief recently talking about these shopping apps. Have they gotten any better? Will you see shoppers on Black Friday, Cyber Monday opening an AI app first to find the deals or to find brands? That's a good question. I don't know if the AI-powered shopping apps are in the place yet, but this is a concern for them.

20:34But I do think that where we're seeing AI disruption here is that shoppers are actually using chat GPT to create Christmas lists. and they're consulting like where to find good deals under the bags or blush or overcoats or what have you and actually recently i think so it's last time chat gpt launched direct checkout to capitalize on that behavior um so you know they're partnering with shopify which powers like storefronts for literally every brand under the sun and then also they're partnering with walmart and with target but it's what's happening is i think it's still too new for some brands to put like a dedicated strategy behind making sure they pop up and chat gpt search results but also llms are surfacing results based on existing chatter.

21:15So if a brand is already in the zeitgeist and they're receiving good reviews and are part of discussions on Reddit and other forums, they'll show up in a consumer's results when that person is looking for a great, I don't know, cozy sweater for their stepfather. I mean, that's me. I'm throwing my Christmas list in there. Not the ex's wedding revenge dress? No, not the ex's wedding. Now we'll focus on getting us. So you found your revenge dress and now you're looking for your sweater. Now I'm looking for my sweater for my stepfather. But part of making sure you're discoverable and people will buy your products, especially at this critical time, is whether it's through retail partners directly with you.

21:50Having already done the qualitative brand building stuff that predates the rise of LLMs. But in terms of dedicated AI-powered shopping platforms, they're still trying to change consumer behavior. I don't think they're there yet to like say, hey, we're going to get you 30 % off, 40 % off all these luxury brands, these mid-price brands just yet. But I'll keep an eye on all that. Yeah, my prediction, and actually I think that would be a good way to close the episode is if we all offer a few predictions. But mine is that this is the year everyone uses AI to recommend products. But next year will be the year everyone uses it to buy them.

22:29Because if you trust it to shop, to recommend products and find the best deals for you, why wouldn't you trust it to just complete the sale at that point? That's a great prediction. I will say that I think that this is the year that maybe Discount Mania finally comes to an end. I think the way that brands are tempering the discounting cadence and maybe retraining customers in that vein will have hopefully long tail effects for future holiday season. Like, have you even seen some brand? Like, we haven't discounted at all. And we stayed at the BF Black Friday so that we can create the sense of urgency and the sense of it feeling special that is happening right now.

23:05So I think that could be a long tail effect of this year. I don't have I don't know this prediction, but I just think that we can't discount, pardon the pun, the discount seeking shopper that's out there. I think that inflation, the geopolitical climate, the economic climate is really weighing on people. And I think there are going to be a large, large cohorts of discount seeking shoppers in the next couple of weeks. And I think there are going to be some very disappointed kids at Christmas if there aren't deals that are 80 percent, at least something. So that's not a prediction, but I do think that some of this strategy does not account for people that are really cash strapped.

23:44I think we I think there needs to be a mechanism for that. As someone once said, kids don't need 30 dolls. They only need two dolls. Who is that great philosopher? Oh, I don't know. You know what? I'm going to go in that's in a similar direction, Sheena. I'm going to offer a theory too and not a prediction going back to what we were talking about on consumer sentiment. But I have a theory that the reason why consumer sentiment surveys are trending downward and has been since COVID is because of the hyper visibility of our lives and everybody just spending all this time on social media and just being exposed to headlines all the time without necessarily understanding anything about the world.

24:36I think that has a lot to do with why people feel so crappy about the economy. There's just so much news about the economy, tariffs, interest rates. And I think because of that, people feel bad about the economy without necessarily understanding it or knowing what to expect. I knew this was all our fault somehow. Thank you, Ken. Well, you know what I want to know is if you guys are shopping this Black Friday and what you're buying. I've never been a Black Friday shopper. Ooh, flex. Okay, okay, that's not true. Okay, that's not true. I haven't shopped Black Friday in a very long time because I shopped too much to begin with.

25:22I'm a shopaholic. So, like, by the time we get to Black Friday, I'm like, do I even have money left? But I will—honestly, as I'm becoming an actual adult, this is a time where I want to be looking at, like, Christmas presents to get people. I think this is a good opportunity for that, and I haven't done that before. But, yeah, I'm not usually attuned to the Black Friday of it all. I tend not to because I don't like feeling that pressure. Like if I don't find something right now, I'm missing some huge deal, especially because as we've been discussing for the last half hour, that's really not true anymore.

25:56The one time I do it is if it's a really big ticket item that I know I need, like furniture or something, that is the time when you're like, OK, these deals don't come around all the time and I would make significant savings. So let's let's take the plunge. Flat screen TV, anybody? And I am following the lead of retailers and saying that I will never do something and then I do it. So every Black Friday, I say I'm not going out. I just don't want to be a part of the ruckus. And then I end up probably half the time going out and just kind of seeing what's happening. I get very curious. And I also have that fashion disease called FOMO.

26:32I feel like I'm missing something if I'm not seeing it. But I'm not a big shopper, but I do like to be a part of it. I'm like the consumer this year. I want to I need an iPhone. I want to get a deal on an iPhone this year. So we're sending you positive vibes. Thank you. Yeah. Hopefully we all have a great Black Friday and Cyber Monday. I think that's a positive. We started this off as saying this is going to be our holiday spectacular. We ended on a shopping positive note. Kat Malik, thank you so much for joining us. Thank you for having us. Thank you for having us. This was so fun. Please be sure to check out Malik and Kat's coverage of the holiday shopping season.

27:07at businessoffashion.com. These and other stories are available to BOF professional subscribers only, and you can find the links in the episode notes. You've been listening to The Debrief, produced and edited by Olivia Davies and Eric Bria. I'm Sheena Butler-Young. And I'm Brian Baskin. We'll be back next week with a new episode. Thanks so much for joining us, and be sure to follow us wherever you get your podcasts.