There are bargains to be had!
Last June, the news was full of articles predicting that stores would have a surplus of inventory later in the summer, and that prices would drop. That has come true. The excess inventory is the result of the supply chain and shipping delays that held many products hostage for two years. Large retailers like Target, Best Buy and Walmart are counting on discounts to move the inventory, and to appeal especially to consumers feeling pinched by inflation. The large retailers reported that inventory levels in the first half of 2022 were up anywhere from 17% to 45% compared to the same time last year. Large retailers are running short of storage space, and cannot cope with returns on top of the excess inventory. Many retailers are refunding customers’ money and telling them to keep the merchandise.
Categories where retailers expected deep discounts:
Work-from-home clothing, furniture, consumer electronics (because the chip shortage is showing signs of abating), and seasonal items like garden furniture.
What has come to pass:
The inventory arrived in stores just as purchasing slowed. Retailers do not typically offer discounts in the fall, but this year autumn looks like it might have the best sales of the year. Toy prices were down 8.2% from July, 2021 to July 2022, the largest drop since before the pandemic began. In that same time period electronics decreased by 9.3%.
Inflation has had a negative effect on spending from those feeling squeezed by increases in their basic cost of living. For those who have some discretionary money to spend, retailers were surprised by the spending shift from goods to services and experiences like travel and dining out. Because stores must order 3–6 months out, things like home office and kitchen supplies which consumers craved during the pandemic were re-ordered and are on store shelves – just as the world has opened up again and consumers are no longer confined to their homes.
These products are experiencing the largest discounts:
- Large and small items for the home
- ‘Athleisure’ clothing, as many consumers returned to office-wear
- Televisions, especially high-end ones like Samsung’s The Frame.
- Storage containers (many consumers organized their storage during the pandemic)
- Home electronics like air fryers (a pandemic favorite, but no longer)
- Sporting goods
- Beauty products
- Toys – prices fell 10.2% year-over-year in July.
- Classic toys and games like Uno and Scrabble. The newer games are still selling well.
With inflation driving food and heating costs up, many families have begun their holiday shopping early to take advantage of the discounts. The sales period between back-to-school and Thanksgiving is usually a quiet retail time, but not this year. The large retailers want to empty their warehouses, so prices will continue to drop. A recent survey by a global market research firm found that 83% of U.S. consumers plan to spend less over the next three months which means that discounts might be even larger.
Large retailers like Target, Macy’s and Bed, Bath and Beyond say they expect inventories and consumer demand will return to a profitable balance by early 2023.