There is the concept that Allah can forgive a person even if they don’t repent. Wouldn’t this discourage a person from repenting or even having a need or desire to want to change?

No, it wouldn’t because it’s just dealing with the ultimate mercy of Allah. Who is He going to forgive even though they didn’t repent? Is it the average sinner or a person who has rejected Allah? It is talking about people who Allah chose to be in Paradise because of other good deeds they have done; so there are some elements there which he chooses to forgive. Because if it is just arbitrary then somebody could be among the most evil and Allah chooses to just forgive him all his sins and put him into Paradise; then of course, what’s the point?

The forgiveness is part of Allah’s grace on those who deserve it and who He has determined who deserve it; and He related it to both their faith and deeds. So, it is only a foolish person who would use it as an excuse to not repent for his or her sin.  It is the same person who says Allah is Oft Forgiving and Merciful and he doesn’t want to talk about Allah being the SHADEED UL INTIQAM i.e. severe in retribution; having the severe penalty and punishment.

Ahmad in his Musnad and At-Tirmidhi in his Sunan recorded that A'ishah (رضى الله عنها) asked the Prophet (ﷺ) if the words, “those who dispense their charity with their hearts full of fear” [23:60] refers to those who are guilty of adultery, drinking and theft. The Prophet (ﷺ) said, “No! Daughter of Siddiq! They are the ones who fast, pray and give alms, and fear that their deeds may not be accepted.”[1]

Reference:

[1]At-Tirmidhi, At-Tafsir,3175; Ahmad’ 6:159