For years, American retailers, restaurants, and other companies have been increasing prices. However, now, American consumers suffering from inflation are starting to decrease spending, and some companies are trying to attract customers back by offering discounts.

Media reports that sales companies of various products, from Ikea sofas to Jordan sneakers, have stated in recent weeks that many goods have already reduced prices this year. Part of the reason is that with the rise in supply chain and labor costs, many companies rapidly increased prices in the past few years when customers with strong purchasing power were willing to pay higher fees.

However, the reduced demand from consumers for many non-essential items (such as housewares or expensive sneakers) has led companies selling these goods to compete in smaller market shares.

Analysts believe that although inflation in the USA has eased somewhat this year, many consumers still feel heavy pressure as the prices of essentials like food, insurance, and housing remain higher than pre-pandemic levels. In September, the inflation rate in the USA dropped to the lowest point in three years, but the slowdown was slower than economists expected.

Decreased consumption, clearing stocks, Ikea, and Nike have both reduced prices.

"This year, global consumers have been affected by inflation, with everyone paying more for housing, food, and energy," said Jon Abrahamsson Ring, Ikea's CEO. In order to drive demand, Ikea has reduced product prices globally by around 10% this fiscal year, the largest annual price cut in the company's history.

He mentioned that by the end of 2023, Ikea reached an agreement with 12 franchisees who operate most of the stores to collectively lower prices, which is a rare move for this furniture giant. "Many people have to spend more on other things, so we have to provide them with low-priced goods as much as possible," he said.

He also mentioned that in order to offset the impact of rising costs, IKEA raised prices overall in the first two years. This year's price reduction attracted more customers to visit the stores, but their spending decreased. On Thursday, the company announced a 5.3% decrease in its annual sales.

Nike, on the other hand, lowered prices for different reasons: to clear inventory because sales were lower than expected. "The outlook for the rest of the year will require us to introduce more promotions," said the company's Chief Financial Officer Matthew Friend during an analyst conference call.

Data shows that Nike's latest quarterly revenue fell by 10%, with profits declining by 28% year-on-year, partly due to higher-than-expected promotional activities eroding profit margins. Nike executives warned that sales for this quarter could drop by another 10%.

Customer traffic decline prompts competition and promotions in the dining industry.

Meanwhile, the US dining industry is also striving to stimulate demand through discounts after prices have risen for several consecutive years.

According to market research firm Black Box Intelligence, same-store customer traffic in various types of restaurants in the USA has been declining this year, especially for restaurant chains. To lure back customers, these chains have launched more discounts and promotional activities this year.

For example, Domino's Pizza announced on Thursday that their latest quarter had a price increase of 1.6%. With low-income consumers reducing takeaway expenses, this chain is stimulating purchases through more temporary promotions. In September, Domino's offered a promotion where large pizzas were priced the same as medium ones, and this month, they reintroduced the "Emergency Pizza" buy one get one free offer launched last year.

Domino's CEO Russell Weiner said during a conference call with analysts that major pizza delivery companies will continue to compete on prices this year. "We are currently in the midst of a pizza war," Weiner said.

Since the summer, other dining chain stores have also increased promotional activities. McDonald's said it will extend the $5 meal deal introduced in June until December because the company wants to continue to keep prices low.

Darden Restaurants announced in September that it will more prominently promote its low-priced menu, with its Olive Garden restaurant extending the 'Never-Ending Pasta Bowl' offer until November. Olive Garden plans to extend the duration of the promotion by about a month compared to last year.