I work in retail (albeit small-business), so I thought I’d chip in my $.02 on the matter of discounts.
As it stands now, especially WRT non-essential consumer goods (the type which I try to sell each day), people who used to be frequent customers in the past are buying much less often or, in the case of some goods, perhaps not at all. It’s not so much that everyone has less money now than they did in the past, but people are definitely being more cautious with their money as there seems to be an overriding sense of “I’d better not buy this thing I don’t really need now in case something does happen later and I need this money for something more important.” If people in the retail sector are being laid off or having their hours cut, it’s not because of coupons, it’s because retail traffic overall is considerably slower than it has been in the past. I know that a lot of the stores in the vicinity of mine are having to cut hours for their front-of-house staff due to poor traffic - people aren’t even browsing as much as they used to.
To that end I think that many retailers are trying to ease their customer bases back into the habit of actually going out and spending their money. Sales and various other promotions are a good way to do this - the stores may not get the profit margins that they want, but at least from my store’s perspective we want to know that people are at least willing to still support us and that there is some actual commerce happening.
With larger retailers you also have some additional dynamics at play. I’d say the key one with the big guys is probably brand loyalty - if I managed Lowe’s Hardware, for example, I might want to run some promotion like a sale or a coupon-matching special to get warm bodies out of Home Depot and into my stores. Who knows, people who come for the one sale we had might end up liking our service and selection more, and decide to become regular shoppers. That helps us in the long run even if our short-term profits are a little less.