All those deals that consumers that have come to love — and in many cases, expect — are taking a toll on the industry's holiday spending projections.
Jack Kleinhenz, chief economist of the National Retail Federation, said Thursday that deflation in the retail sector is one reason the trade group expects holiday sales to increase 3.7 percent this year. That would mark a deceleration from last year's 4.1 percent growth.
As retailers continue to compete on price, Kleinhenz said they have to sell more to achieve the same level of sales gains. The holiday season is already shaping up to be competitive, with Wal-Mart launching its layaway program two weeks early, and Target expanding its price-match guarantee.
The arrival of European competitor Primark is expected to put even more pressure on retailers' pricing strategies. On a tour of the company's new Boston store, Guggenheim Securities analyst Howard Tubin said he saw a pair of skinny jeans selling for $7.
"It becomes a challenging environment," Kleinhenz said.