Sticker shock could change retailers’ approach to sales

Keith Fitzgerald has gone to extreme lengths this holiday season to make sure he gets the perfect gift.

Fitzgerald, a 40-year-old hairstylist, searched online and at stores for a special edition Lego: a nearly 4,000-piece set that resembles the house in the Christmas classic, “Home Alone” — complete with booby traps and a zipline to the backyard treehouse. He knew the $250 set would delight his boyfriend on the final night of Hanukkah.

Yet when he logged onto the Lego website, the set was sold out. No nearby stores had any in stock. He reached out to family and friends across the country and enlisted the help of a friend who stood in line at a New York City store, bought it for him and agreed to mail the giant box to his home that’s near Richmond, Virginia.

“The shipping, that’s a little extra, but he’s worth it,” Fitzgerald said.

Consumers’ huge appetite to spend and the global supply chain crunch are colliding this holiday season. For shoppers, that is making some desired toys, clothes and other items hard-to-find, even as retailers like Walmart and Target say there will be plenty of merchandise to choose from on shelves. It is also driving up prices and flipping the script for shoppers who used to get motivated by a deal.

U.S. consumers will see smaller discounts across all major gifting categories, according to Adobe Analytics, which tracks retailers’ websites. Electronics, for instance, are expected to peak at 22% discounts during the holiday season versus 27% in 2020. Discounts on toys will peak at 16% compared with 19% a year ago. And apparel will peak at 15% instead of 20% in 2020, the company projected.

Shoppers will still see the biggest discounts around key retail holidays, Thanksgiving, Black Friday and Cyber Monday, according to Adobe. Even those prices won’t be as low, though. On average, it estimated shoppers will pay 9% more during Cyber Week compared with a year ago, Adobe said.

With consumer demand so high and inventory of some items low, some retailers have found themselves with the upper hand. Shares of Macy’s and Kohl’s rose after the retailers reported quarterly results that benefited from lean inventory and few markdowns.

On third-quarter earnings calls, leaders of the department stores said that they have been able to pass on higher costs from shipping and cut back on huge price cuts when selling clothes, shoes and home goods. Fewer items are also winding up on the department stores’ clearance racks, too. That is resulting in higher profits.

Luc Wathieu, a professor of marketing at Georgetown University’s McDonough School of Business, said retailers don’t need to dangle discounts in the same way this holiday. In fact, he said, retailers would be silly to do so. Fear of not finding a much-wanted item is enough motivation for people to rush to the store or a…