US retailers are gearing up for a more price-sensitive customer ahead of the critical holiday selling season, as soaring inflation clouds their hopes for more normal levels of supply and demand than they saw during the first two years of the coronavirus pandemic.

Some of the country’s largest store chains have reported robust back-to-school sales in recent days and said they expect consumers to prioritise celebrations with family and friends at Halloween, Thanksgiving and Christmas. But their optimism has been tempered by the acknowledgment that low-income consumers are struggling with higher food and petrol prices.

Walmart, the largest US retailer, is responding by offering entire Thanksgiving meals that cost less than $50 for a family of four. “We expect inflation to continue to influence the choices that families make, and we’re adjusting to that reality so we can help them more,” Walmart chief executive Doug McMillon said last week.

Morning Consult, the polling group, reported this week that “sticker shock” about high prices was prompting Americans earnings less than $100,000 a year to cut back, while wealthier consumers were taking inflation in their stride.

That has affected clothing retailers in particular, with department store Nordstrom shares falling more than 13 per cent on Tuesday after it said it had seen “significantly” lower demand from its lowest-income customers since June.

Macy’s, the rival department store group, also said on Tuesday that a “competitive promotional climate” was intensifying as discretionary spending weakened. “Inflation is outpacing wage growth. That’s just not sustainable for the consumer,” said Adrian Mitchell, its chief financial officer.

That echoed the view of Dick Johnson, chief executive of Foot Locker, which last week predicted a 320-330 basis point hit to its full-year margins as a result of having to sell its sneakers at a lower price point.

“The promotional environment has become more intense, especially in apparel,” he said. “Our view is that the back-to-school season will be strong, but we do see increased uncertainty from then until the holiday season begins, given the more challenging macroeconomic environment.”

Retailers have been encouraged by signs of slight relief for the US consumer in recent weeks. Consumer prices moderated to a year-on-year pace of 8.5 per cent in July, while US retail sales held steady despite weak consumer sentiment, benefiting from a dip in petrol prices below $4 a gallon.

Executives also detect a strong desire to return to normal patterns of celebrating the holidays after two years during which fears of catching or spreading coronavirus kept many Americans from gathering with family and friends.

“When we talk to consumers . . . one thing that seems to be very consistent is a guest and consumer who says they want to celebrate the holiday seasons,” Target chief executive Brian Cornell said last week.

That will make consumers likely to spend on gifts and get-togethers this year, but in a more “budget-conscious way”, according to Michael Baker, senior research analyst at DA Davidson. “There will be a focus on value” with retailers highlighting good deals, he said.

After being bitten by supply chain disruptions and high transportation costs last year, large retailers accelerated their imports of seasonal merchandise this year.

Target, which had to pay extra to import last-minute goods by air last year, said it had secured temporary capacity near ports allowing it to hold inventory until the “ideal time” to get it into stores for the holidays.

As consumers grapple with inflation near 40-year highs, retailers may struggle to accurately predict how much inventory will be needed and which products will be winners, said Neil Saunders, a retail analyst at GlobalData.

“Retailers have really been stung by [excess inventory] in the current quarter so they are very wary of over buying,” he said, adding that margins will be the “biggest headache”.

Even so, Mattel, the maker of Barbie dolls and Hot Wheels cars, said it had swelled inventories in anticipation of holiday demand. On its earnings call last month, chief executive Ynon Kreiz said: “We expect [the] traditional holiday season shopping pattern to return.”