The costs of discounting

WHAT'S NEW: Despite cutting inventories, stores are being forced to be even more aggressive about discounting than a year ago in an effort to lure financially squeezed shoppers.

THE COSTS: A weak August may mean more piles of marked-down items on the floor, which could hurt third-quarter results just as stores prepare for the critical holiday period. The price cuts can also cost high-end retailers like Nordstrom Inc. and Saks Inc. some of the cache of their brands. Another worry is that consumers will get used to the generous discounts and resist buying regular-price items when the economy improves.

WILL IT BE ENOUGH? Shoppers may still avoid mall-based clothing stores in favor of discounters, thinking they'll get better deals. The nation's same-store sales results, set to be released Thursday, are expected to show a persistent disparity between low-price operators such as Wal-Mart Stores Inc. and the mall-based apparel chains.

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Retailers slash prices, but at what cost?

Associated Press

Tue Sep 2

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