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Black Friday promotions are arriving earlier this year as U.S. consumers continue to grapple with elevated prices. Inflationary pressures remain a headwind, prompting retailers to roll out discounts sooner to capture price-sensitive shoppers.

Persistent inflation and rising prices have also created a more value-conscious consumer. With U.S. inflation hovering around 3%, discretionary spending is under pressure, and shoppers are prioritizing essentials over non-essentials. In this context, discounting becomes a critical lever for retailers to stimulate demand amid price sensitivity, driving traffic, conversion and competitive differentiation.

Millions of Americans will flock to malls with family and friends the day after Thanksgiving in search of bargains. However, spending is likely to be more restrained this year as tariff-affected retailers scale back promotional activity. Across retail sectors, data reveals a notable trend: both discount penetration, the proportion of merchandise on sale, and average discount rates have declined. In fact, many categories are posting their lowest discount levels since 2016, according to a collaboration between LSEG and Centric Market Intelligence.

Two sectors stand out as exceptions: Specialty Retail and Department Stores, which are offering the deepest discounts this season. Notably, Specialty Retail has increased its discount penetration compared to last year, bucking the broader trend.

Despite earlier promotions, U.S. Online Retail discount penetration fell to 31% in November, compared to November 2024, marking the lowest level for this month since tracking began in 2016.

Exhibit 1: U.S. Online Retail: Discount Penetration: 2019 – Nov 2025

Source: Centric Market Intelligence

The average discount has also edged lower, slipping from 35% in November 2024 to 34% in November 2025. This suggests retailers are adopting a more targeted approach, fewer items on sale and smaller reductions to safeguard margins.

Exhibit 2: U.S. Online Retail: Average Discount: 2019 – Nov 2025

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Source: Centric Market Intelligence

Price pressures persist

Retailers face a discerning consumer as prices continue to climb. In footwear, for example, prices have risen steadily since January 2025, with lace-up and Oxford shoes up an average 4.27% year-to-date (Exhibit 3). This trajectory closely mirrors U.S. inflation data, which has hovered around 3%, underscoring the persistent cost pressures shaping consumer behavior and retailer strategies.

Exhibit 3: Footwear Market Price Increases: January 2025 – November 2025

Source: Centric Market Intelligence

LSEG Holiday Sales Forecast

Looking ahead to Q4, the LSEG U.S. Retail & Restaurant Index projects 1.9% revenue growth versus last year, while earnings growth is expected to be a modest 0.7%.

Our analysis shows five of ten consumer-related industries trending negative (Exhibit 4). Among 192 retailers tracked by LSEG, Leisure Products leads in expected earnings growth, driven by toy makers Mattel and Hasbro, reflecting strong seasonal demand. The Hotels, Restaurants & Leisure sector ranks second, with earnings forecast to rise 14.8% year-over-year, supported by holiday travel and dining trends.

Exhibit 4: The LSEG Retail Earnings Growth Rate – Q4 2025

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Source: LSEG I/B/E/S

Specialty sector

The Specialty sector remains the most promotional this season, with discount penetration surging from 63% last year to 69% during Black Friday week. However, the average discount has held steady, signaling that while more items are on sale, markdown depth is relatively unchanged. This means nearly seven out of 10 products in the sector are discounted, underscoring a highly promotional environment aimed at driving volume.

Exhibit 5: Specialty Sector Discount Penetration: 2016 – 2025

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Source: Centric Market Intelligence.

The average discount now stands at 24%, slightly below last year’s 26%, but still well above pre-pandemic norms. In short, 69% of merchandise is on sale at an average discount of 24%, reinforcing the sector’s aggressive stance to capture holiday demand.

Exhibit 6: Specialty Sector Average Discount: 2016 – 2025

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Source: Centric Market Intelligence

Mid-tier department store sector

Department stores remain among the most promotion-driven segments, though discounting has moderated. For Black Friday, discount penetration is at 59%, unchanged from last year, marking the lowest level since 2016, a sign that retailers are prioritizing margin protection over deep discounting.

Exhibit 7: Department Store Sector Discount Penetration: 2016 – 2025

(Click on image to enlarge)

Source: Centric Market Intelligence.

Average discounts have also shifted meaningfully: 17% in 2025 versus 28% in 2019, highlighting a structural move toward more measured markdowns.

Exhibit 8: Department Store Sector Average Discount: 2016 – 2025

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Source: Centric Market Intelligence

Among department stores, Dillard’s continues to outperform, leveraging loyal customers, on-trend assortments, and targeted promotions. The stock is up 41.65% year-to-date, and StarMine data ranks Dillard’s in the top decile for Earnings Quality, scoring 99 out of 100, indicating sustainable earnings sources.

Moreover, analysts polled by LSEG remain bullish on the Q4 performance of Dillard’s. The Q4 2025 EPS consensus stands at $8.68, and the StarMine Predicted Surprise exceeds 2%, signaling a high probability of an earnings beat, and post a positive surprise. The StarMine SmartEstimate is a weighted average of analyst estimates, with more weight given to more recent estimates and more accurate analysts. Our studies have shown that when the SmartEstimate differs from the consensus (I/B/E/S mean) by more than 2%, the company is likely to post subsequent earnings surprises directionally correct 70% of the time. This percentage difference is referred to as the Predicted Surprise (PS%) (Exhibit 9).

Exhibit 9: Dillard’s StarMine SmartEstimate and Predicted Surprise %: Q4 2025

Source: LSEG Workspace

U.S. mall stores

Consumer shopping behavior has evolved since the pandemic, with shoppers pushing back against persistent high prices and increasingly seeking everyday value. In response, U.S. mall stores are ramping up promotions to drive foot traffic ahead of Black Friday.

This week, approximately 40% of online merchandise from U.S. mall stores is on sale, though discount penetration remains below last year’s 48%, signaling a more measured approach to markdowns.

Exhibit 10: U.S. Mall Stores Discount Penetration: 2016 – 2025

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Source: Centric Market Intelligence.

The average discount has risen to 17%, up from 12% last year, indicating a slightly more promotional environment compared to 2024, even as overall penetration declines.

Exhibit 11: U.S. Mall Stores Average Discount: 2016 – 2025

(Click on image to enlarge)

Source: Centric Market Intelligence

Premium sector

Luxury retailers saw a sharp spike in discounting during the 2020 pandemic, reaching the highest levels since 2016. However, the trend has reversed over the past two years, with both discount penetration and average markdowns falling to their lowest Black Friday levels. Currently, discount penetration stands at 16%, down from 31% last year, signaling a return to disciplined pricing strategies.

Exhibit 12: Premium Sector Discount Penetration: 2016 – 2025

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Source: Centric Market Intelligence

Meanwhile, the average discount has dropped to 6%, compared to 12% last year. This reflects a more restrained approach as luxury brands prioritize brand exclusivity, perceived value and margin protection.

Exhibit 13: Premium Sector Average Discount: 2016 – 2025

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Source: Centric Market Intelligence

Beauty sector

The beauty category has historically maintained lower discount penetration and smaller markdowns compared to apparel and accessories. Last year, Black Friday week saw penetration rise to 22%, but in 2025, only 4% of beauty merchandise is on sale, with an average discount of just 1%. This aligns with the sector’s long-standing strategy of stable pricing and brand integrity.

Exhibit 14: Beauty Sector Discount Penetration: 2016 – 2025

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Source: Centric Market Intelligence.

Sold out rate by sector

The Specialty Retail group continues to stand out with high discount penetration and aggressive markdowns. Given strong consumer demand for value, these promotions are driving faster sell-through, resulting in elevated sold-out rates (Exhibit 15).

Overall, however, the number of sold-out items in November 2025 has declined across all sectors compared to last year’s holiday season, signaling more cautious inventory management and potentially softer demand.

Please note: “Sold out” refers to items that went completely out of stock at any point during the period, even if later restocked, they are still counted as sold out.

Exhibit 15: Sold Out Rates By Sector 2019 – 2025

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Source: Centric Market Intelligence.

Among the top sold-out categories are jumpsuits & rompers (17%), shorts and swimwear (16%), and skirts & skorts (15%) (Exhibit 16). Each category has eased slightly from last year’s levels, reflecting a more measured approach to discounting and inventory turnover.

Exhibit 16: Top Sold Out Categories, November 2025

Source: Centric Market Intelligence

Holiday season summary

Retailers launched holiday promotions earlier this year, but discounting remains more restrained, with the lowest markdown levels since pre-pandemic times. The Specialty sector leads in promotional activity, followed by department stores, with apparel seeing the deepest markdowns within Specialty. In contrast, Premium and Beauty sectors are maintaining selective discounting strategies, reinforcing brand exclusivity and margin discipline.

On the earnings front, the Leisure Products sector is poised for the strongest growth, driven by robust toy sales, while Hotels, Restaurants & Leisure ranks second, supported by holiday travel and dining trends. Given consumers’ heightened focus on value, retailers offering compelling deals are likely to capture share this season, while those prioritizing margin protection may see softer volume growth.

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