By Rachel Wolfe
Aug. 23, 2022
Few shoppers want to think about Christmas gifts in August. But an unusual set of deals could mean major savings for those who do.
They’ll find the best deals in home, apparel, electronics, sporting goods and toys, analysts say.
These long-delayed goods have arrived ashore at the same time that spending is slowing. Retail analysts say they expect the typically discount-light fall months to see some of the best sales in years.
In many cases, retailers have already started discounting certain items. Toy prices were down 8.2% year-over-year in July, according to Adobe, the biggest drop since before the pandemic. Prices for electronics decreased 9.3% in that time, and clothing prices dropped 1%.
Target and Walmart said last week that they continue to struggle with a supply surplus. That problem hit Target’s profits especially hard. Walmart had previously sent a warning to investors saying that efforts to clear out excess inventory and weak demand would diminish operating income for the quarter. Inventory at toy company Mattel, meanwhile, is up 44% year-over-year, according to the company’s second-quarter earnings.
Savvy consumers are paying attention.
Christine Whisler has already started buying toys for her 9-year-old daughter for Christmas and her birthday, also in December. The 35-year-old retail merchandiser and single mom in San Angelo, Texas, snapped up a $52 doll-size light-up car on sale for $15 at Walmart. She also got a $20 build-your-own solar-powered robot kit for $6 and a $20 doll based on the Pixar movie “Turning Red” for $3 from Walmart, plus a $100 Rainbow High doll for $40 on Amazon.
“I can’t afford much of anything for my kiddo otherwise,” Ms. Whisler says. Her grocery bill has practically doubled since January, she says, and that’s with switching to store brands and shopping the sales.
“If I know it’s a great deal and my daughter would love it, I get it before the deal is gone,” she says.
Chirag Modi, who oversees supply-chain execution and warehousing at consulting firm Blue Yonder, says retail and manufacturing companies are sitting on huge piles of inventory because of how much they had ordered ahead of time and demand changes in an inflationary environment. “Come October, maybe even September, they will dump it. They are going to start marking it down.”
Big sales are part of an effort this fall to motivate shoppers grappling with the highest inflation in four decades and giving priority to the travel and restaurants they missed out on, according to retail analysts.
The period between back-to-school and Thanksgiving is typically slower for retailers, says Mickey Chadha, a Moody’s Investors Service analyst who tracks the retail industry. In a normal year, he says, stores would have timed their inventory accordingly and held off on major promotions until shoppers got into a more festive frame of mind.
This year is different. “Because they have more inventory, they are more focused on getting rid of that inventory rather than saying, ‘I want to make X amount of margin,’ ” Mr. Modi says.
Nikaiya Snell, an elementary-school cafeteria worker based in Lansdowne, Pa., has had to pick up freelance shifts working events to pay her bills with inflation. New clothes and other luxuries had been furthest from her mind—until she saw a bunch of trendy summer tops marked down from $16 to $3 apiece at Walmart. “Summer will be here next year,” the 44-year-old says.
Retailers with lower inventory turnover, including stores like Gap, Bed Bath & Beyond, Kohl’s, Best Buy and Dick’s Sporting Goods, are especially likely to put goods on super sale, Mr. Chadha says.
Value stores like TJX Cos., Dollar General Corp. and Dollar Tree Inc. are unlikely to cut their prices further, Mr. Chadha says, because the stores are already benefiting from higher foot traffic from consumers looking to stretch their dollar.
What to Buy Now (and What to Wait On)
Retail analysts break down the best items from your list to buy in advance, and where to hold off.
BUY High-end televisions: “If it were me, I would definitely get a TV right now, especially if I have a certain model in mind,” says Vivek Pandya, lead analyst for Adobe Digital Insights. More upscale varieties, like Samsung’s the Frame, are at the sweet spot of availability and discounted price, he says. Consumers might be better off holding off on budget models, however, because they’re likely to come down even further in price, he says.
DON’T BUY Game consoles: The best bundling (where manufacturers throw in, say, a few games with the cost of the console) happens around the holiday season, Mr. Pandya says.
BUY Computers: Prices fell 10.2% year-over-year in July, according to Adobe. Especially for shoppers who have a specific make and model in mind, now is a good time to buy a new laptop for the same reason a TV purchase could make sense, Mr. Pandya says.
DON’T BUY Certain home goods: Mr. Pandya thinks consumers should wait a beat before splurging on appliances and furniture as excess inventory may drive bigger discounts closer to the holiday season.
BUY Classic toys and games: Companies are looking to get rid of excess stock of games you’ve already heard of like Uno and Scrabble, Mr. Modi says. They are more likely to hold on to the hot new Cocomelon stuffed animal until they can fetch a better price for them. While Mr. Pandya expects discounts to continue into the holiday season, he says there are no guarantees. Today’s goods glut could be next week’s shortage, he says.
DON’T BUY A new back-to-work wardrobe. Demand for stay-at-home categories like home goods, electronics and casual wear has been rapidly replaced by demand for back-to-office and party clothes, says Mr. Chadha, driving up prices on suits and formal dresses. If you don’t need that office outfit ASAP, discounts are possible later, especially if demand stabilizes or retailers use these more popular items to increase traffic and drive interest in other categories, Mr. Chadha says.
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