‘Tis the season for discounts and deal hunting.

The off-price sector is poised to have a strong holiday season, according to experts, thanks to unusually high inventories across retail and a surge of deal-hungry consumers. However, holiday sales across the board are still expected to increase at slower pace than in 2021, Deloitte forecasted, reflecting an overall slowdown in the economy this year.

“When consumerism took a huge cliff and dropped off, [demand] was pretty steady throughout the treasure hunt, off-price environment,” Brett Rose, CEO of United National Consumer Suppliers, told Footwear News in an interview. “Those high inventory levels being dumped back into the secondary market translate to driving prices down in the off-price segment, which alleviates a bit of the pressure from inflation.”

According to Rose, whose company distributes products to several off-price retailers, including Ross Stores and some TJX-owned stores, chains like TJX Companies, Ross, Five Below, Dollar Tree, Dollar General and Family Dollar have continued to see strong traffic throughout 2021 and 2022. Now, the discount sector will continue to benefit from its ability to offer deal hunters lower prices in a holiday season plagued by inflation.

Rose added that an increase in “brand agnostic consumers” will also benefit the off-price sector, which typically offers off-brand versions of popular items like leggings and footwear.

“There is a big shift to either store-brand are off-brand, because they realize, in many cases, it’s the same quality and a better value,” Rose said.

According recent data from foot traffic analytics firm Placer.ai, visits to luxury and off-price retailers have outpaced the greater apparel retail category since the week of Aug. 8, though both categories were still down compared to last year. This data suggests that the gap between luxury and off-price shoppers is expected to widen this season, explained Placer.ai head of analytical research R. J. Hottovy in a report, with both of these categories seeing the bulk of the traffic.

While the state of inventory and deal-hunting are tailwinds, the off-price sector will still have to compete with deep discounts across mainstream retail as well, as stores look to offload inventory in their own channels. For example, retailers like Target and Walmart have mentioned increasing markdowns in their stores to clear through excess inventory in categories like apparel. In many cases, these markdowns have been branded as early holiday or Black Friday deals.

“Bargains won’t be confined to off-price, they will be pretty widespread across the whole retail sector, and this could take the edge away from off-price,” explained managing director of GlobalData Neil Saunders. For example, Macy’s said in Q2 that the holiday shopping season would commence in October and noted that it would increase markdowns across inventory as needed.

At the same time, shoppers are more likely to aim for smaller basket sizes, even in off-price stores, to save money, Saunders said. Overall, almost one-third of U.S. consumers are planning to spend less this holiday season due to inflationary concerns, according to a recent Gartner survey. And 28% of consumers said they will be cutting spending as a result of brands raising prices due to inflation. So despite a desire for deals, consumers appear to be looking to save money where ever they can.

“I expect the whole off-price segment to perform reasonably well over the holidays,” Saunders said. “However, this won’t be a boom year like 2021 — this will be a lot more subdued.”