2010 Discounting Forecast: Retail and Auto

Retailers manage inventory levels and reduce the number of sales.

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In the jewelry business, there will be constant discounting throughout the year, not just near Valentine's Day or Mother's Day. Hendler predicts that gold and diamonds will see discounts between 25 and 40 percent off, which is on par with 2009's discounts. Moderate jewelry will continue to be purchased in lieu of higher-end jewelry. Sterling silver will be purchased over gold, for example, and pearls will be bought over diamonds. Companies that have recognized this transition to moderate jewelry are having major growth, and those that have not followed the trend will do so this year, he says. As a result, this moderate jewelry market will get clogged with too much inventory, and the consumer will benefit from more discounts, Hendler says. Also, more and more jewelry retailers will be going out of business in 2010, so look for more promotions and sales across the board, says Brit Beemer, chairman of America's Research Group, a consumer and market research group.

Jewelry manages itself through economic cycles, Cohen says, meaning you will see less expensive jewelry become more important during challenging economic times. However, as the economy recovers, jewelry is going to be one of the first industries to really show the sign of recovery with pent-up demand and frugal fatigue setting in, Cohen says.

Home furnishings

If you're looking for new furnishings, bedding, and bath products this year, you may benefit from continued discounting throughout the home furnishing industry. Fewer people buying new homes means that more home furnishing items will go on sale. Look for more sales on furnishings at big-box stores like Wal-Mart and Lowe's, as these mass merchants try to keep their prices competitive with fellow large retailers, Cohen says.

The common signs promising, "No interest! No payments for 18 months!" at furniture stores will soon be hard to find. Beginning on February 22, provisions from the "Credit Card Accountability, Responsibility and Disclosure Act of 2009" passed by Congress in May 2009 will go into effect, requiring retailers to be more honest with their deferred-interest promotional programs. The act will ensure that retailers disclose all the terms of the deferred-interest promotion upfront. It will also require that all deferred-interest promotions last at least six months. The act outlaws "hair trigger" defaults, wherein a customer is retroactively charged all accrued interest on the deferred-interest promotion if he or she makes monthly payments several days late. From now on, unless consumers are more than 60 days late with payments, they cannot be charged accrued interest on the promotion.

This new act will drastically affect how furniture sellers do business. More than half of all furniture purchases are made because of these deferred-interest promotions, Beemer says. Once the act goes into effect, furniture suppliers may continue to offer zero-percent interest promotions but with a reduced down payment on a monthly basis, with possibly a lump sum due after a set time, Beemer says.

Cars

If you are looking to buy a car this year, expect to see more selective discounting on certain models but fewer industrywide discounts, says Schuster with J.D. Power and Associates. Car transaction prices will be higher, and the average incentives will be lower. "That means consumers may be paying more for their vehicles on average in 2010," he says.

In the first months of this year, Schuster says there will be a large increase in car production. He says if there is not enough consumer demand right away, this could lead to selective and targeted discounting. If manufacturers see certain vehicle types that are not selling, there will be more specific discounting on those. Schuster says consumers can expect to see more targeted discounting like this but fewer blanketed discounts.

Of the major auto manufacturers, Chrysler will offer some of the biggest discounts in an attempt to remedy its poor sales last year. In 2009, it fared the worst of all major U.S. automakers, seeing sales decline 36 percent and selling less than 1 million vehicles, for the first time since 1962. Chrysler plans to offer more buyer incentives this year, including no-interest financing for almost all 2010 models and up to $3,000 cash back to buyers. GM and Ford will also offer cash-back incentives and low APR financing on 2010 models. However, both have said they are trying to curb incentives rand use more competitive pricing structures, says John Tews, a spokesperson for J.D. Power and Associates.