Discounts need to be created in Settings > Discounts before they can be manually assigned during a sale. You can create fixed and percent discounts. Both can be applied to individual sale items but only the percentage discounts can be applied to an entire sale.
For more information, see our Creating discounts article.
AdvancedIf you need to automate your discounts, you can do so in Settings > Price Rules.
For more information, please see our Creating price rules article.