What to Expect this Holiday Season

• Retailers may reduce discounts some this holiday season, a pattern that was spotted during Prime Day by companies that serve the ecommerce sector.

• Promotions may start sooner this year, and some 40% of surveyed consumers plan to start shopping by October, according to Simon-Kucher, a consulting firm.

• Many merchants are pulling back on promotions due to tariffs and other expenses.

Already planning your holiday shopping? You’re not alone. But even early birds might need to look harder for deals this year.

Retailers are likely to pull back on promotions, leading to a 2% year-over-year drop in the number of orders placed with a discount, according to recent research from Salesforce. Many merchants are already making smaller price cuts during sales, according to companies that serve the e-commerce sector, and they’re likely to stick to the strategy.

A possible silver lining: Shoppers could have more time to do the math on purchases they’re mulling. Retailers and brands want to nab consumers early to avoid losing them to rivals this fall, retail experts said. Amazon (AMZN), for instance, is kicking off the season with a sale on October 7 and 8.

Meanwhile, many consumers plan to start early to avoid tariff-fueled price increases. Almost 40% anticipate they’ll begin their holiday shopping by October, according to consulting firm Simon-Kucher.

The industry generally views early November through the New Year as the holiday shopping season. About 40% of retail sales occur in the fourth quarter, said Shikha Jain, partner for consumer and retail in North America at Simon-Kucher. This year, Americans are expected to spend $1.6 trillion during the period, according to consulting firm Deloitte.

Promotions may play out like they did during Amazon’s Prime Day sale this summer, according to Andrew Waber, director of market research for e-commerce advisory firm Momentum Commerce, when brands discounted more items but by smaller amounts. Nearly 26% of products were on sale, compared to roughly 24% last summer, he said, while the average discount was almost 3 percentage points smaller.

“The discounts will be there” this winter, Waber said. “They just may not be quite as large.”

Brands were recently offering an average of 14% off, down from about 16% at this time last year, said Phelim Killough, senior data analyst at Signifyd, which provides fraud prevention services to online retailers.

“Inflation is sort of creeping into e-commerce, so there is the argument that there’s going to be less margin for merchants to play with,” Killough said.

Americans have been focused on finding deals for several quarters, according to companies including McDonald’s (MCD), Walmart (WMT) and dollar stores. The thrifty ethos may spill into the holiday season, with people planning to spend an average of 5% less than last year, according to consulting firm PWC. Nearly half of shoppers envision getting gifts from resale markets, Salesforce said.

Consumer concerns about tariffs may be warranted. About 75% of retailers surveyed in May indicated that they would reduce the size or scope of discounts because of tariffs, Signifyd said. Businesses have taken a gradual approach to passing along the cost, with consumers absorbing a fifth of the impact through June but likely to experience two-thirds of it by October, according to Goldman Sachs research published last month.

Selling at full price is a priority for apparel companies like Ralph Lauren (RL), Nike (NKE), Abercrombie and Fitch (ANF) and Levi Strauss (LEVI), according to transcripts of recent investor events.

The average transaction size has ticked up—and stayed up—for a number of retailers, suggesting that they haven’t reversed price increases due to plummeting demand, said Michael Gunther, head of insights at Consumer Edge, a research and analytics firm.

“It seems like these companies are testing the waters,” Gunther said. “And there hasn’t been too much pushback.”

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