Key Takeaways
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- Rising tariffs and inflation are pushing brands to cut back on promotions this holiday season.
- Companies like Coach and Therabody are prioritizing margins and brand exclusivity over discounts.
- Retailers face a dilemma: protecting profits while catering to deal-hungry consumers.
- U.S. shoppers’ holiday budgets are down 5% from last year, with sharper drops among younger consumers.
- Analysts predict Black Friday discounts will appear “reasonable” but less deep than in prior years.
Tariffs Push Retailers to Raise Prices, Limit Discounts
Retailers are entering the 2025 holiday season with fewer bargains and more caution. U.S. tariffs on imported goods have raised costs for consumer brands, prompting many to reduce or eliminate Black Friday promotions.
At this time last year, products like Ash Harbor’s whiskey dispensers and ThinkFit’s meal prep containers were discounted by up to 20%. This year, they’re selling at full price.
“It just doesn’t make financial sense for us to offer discounts because our cost of goods is so high due to tariffs,” said Dan Peskorse, owner of Upstream Brands, which sells products on Amazon.
Luxury and Lifestyle Brands Hold Firm on Pricing
The impact extends across sectors. Coach and Therabody—along with brands like Nike, Levi’s, and Ralph Lauren—are dialing back markdowns. While some cite tariffs and inflation, others aim to preserve brand prestige and avoid the perception of excess inventory.
“While promotional activity continues in parts of the market, we’ve deliberately moved away from deep discounting,” said Coach CEO Todd Kahn, emphasizing exclusivity and product innovation over price cuts.
Therabody, which produces premium wellness devices, has already raised prices by 5–7% and plans smaller promotions than last year.
Consumer Spending Under Pressure
With inflation weighing on households, consumer sentiment remains fragile. A PwC survey projects average holiday spending will decline 5% year over year, with a sharper 23% drop among Gen Z shoppers.
“It’s a bit of a perfect storm,” said Peskorse. “Consumers are cash-strapped, and retailers are squeezed by costs.”
Retail analysts describe retailers as “between a rock and a hard place,” forced to balance margin protection with competitive pricing to drive sales.
Discounts Will Be Shallower, Not Absent
Experts expect some promotions to persist—particularly in mass retail—but warn they’ll likely be less generous than they appear.
“They’d rather sell out than sell off,” said Marshal Cohen of Circana, noting companies are ordering fewer goods to avoid deep markdowns.
Shoppers will still find doorbusters, but many of the “discounts” will be layered on top of prior price increases, dulling their real value.
