MINNEAPOLIS — Whether or not you plan your shopping around Amazon Prime Day, the annual summer sale became too big for for competitors to ignore several years ago, and this year there is more at stake than usual.
"It's especially important because of all that's happening," said Mark Bergen, Marketing Professor at the University of Minnesota's Carlson School of Management. "From still post-pandemic times, to inflationary issues, to fears with the recessions, we've been calling it an uncertainty multiplier. It's at a level that we haven't seen before, I think, in the country."
Bergen says these summer sales will serve a couple of purposes for retailers, beginning with trying to better understand what we're all really looking for right now.
"The retailers had trouble with this in the last buying season, so there was a lot of excess inventory of things that arrived late, or they ordered that people didn't really want," Bergen said. "And then a second issue is, because they missed the mark, there's a whole bunch of excess inventory that you might get some really good deals on."
He says the best deals will be easy to spot. He says big ticket items like home appliances, electronics and other home goods were already popular 'loss leaders' for online retailers to entice customers to shop more, but this year there is an added incentive to move those items because demand for them has slowed down, and they often take up a lot of space in warehouses.
In a sign of how desperate retailers are to free up smaller, unpopular items from warehouses, reports emerged last week of Amazon, Target and others looking to cut down on shipping costs by paying customers to keep some returns.
"They're actually telling people take the merchandise and keep your money because we don't want the product," said David Vang, finance professor at the University of St Thomas.
Vang says retailers are willing to take such steps because they are also uncertain about the future, and with a much more pivotal shopping holiday around the corner, he says they're willing to try paying customers to keep the small stuff, and offering steep discounts on some big stuff that have been sitting on shelves.
"If they can clear out their inventory and get some excess cash, they will probably start buying from their suppliers right now, because of inflation going up at about 8 percent," Vang said. "That's going to really kind of help, so that they can be ready for the Christmas season."
Whether or not we collectively buy in, could tell us all a lot about the months ahead.
Bergen: "You will learn about customer sentiment, their fears of recession and inflation, and that will be the total sales and demand dollars."
Erdahl: "It sounds like you're saying retailers are just kind of a step behind right now."
Bergen: "Yeah, and normally they're a step ahead, and so I think that's what's so interesting about this Prime Day. They're still really trying to understand buyer behavior, and so I think they're going to try to understand, can they get this right? If they can get this right, that would bode well for the holidays coming."
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