Conventional wisdom has long held that the best deals come close to the holidays. Another bit of conventional wisdom is that the best time to buy is when the economy is in recession and retailers need the money. These age old rules of shopping may not be as rigid as they once were. They still hold true, but perhaps not for as long as they once did. Here are two reasons why now is the best time to shop in perhaps the last 5 years, and why your window of opportunity may be slimmer than years before.
When times are tough, it’s tough to make a profit
When the economy is in recession, businesses have a much harder time moving goods. The current economic condition is thought to be one of the worst recessions in living memory. A recent report from the Labor Department shows that consumer prices dropped by the largest amount since 1947. The price of oil is down 60% in the past four months alone, and gas prices have actually followed suit. The core consumer price index (excluding food and energy) posted its first drop in more than 25 years. All of this makes for good news for consumers, but bad news for retailers. Companies are going to start having a more difficult time making profits if they haven’t already had difficulties.
In drastically bad times, companies often go out of business altogether and are forced to liquidate whatever merchandise they have on the shelves and in the warehouse. Linens ‘n Things, The Sharper Image, Circuit City and others have already filed for bankruptcy in 2008, and I’m sure we’ll see more. This puts consumers in a great place to pick up merchandise at huge discounts. The trick is timing. If you wait too long, the best stuff will be gone and you’ll have little more than the bones to pick over.
Retailers that don’t go out of business altogether, have to take action to stimulate sales. Often times, retailers have little choice but to entice consumers with hefty markdowns. It’s times like these that make it much easier for consumer’s to make a deal, or haggle with retailers. It’s a buyer’s market.
Stores are being bitten by the credit crunch too
Stores know the credit market is tight and they rely heavily on consumers using credit cards. Many are increasing 0% interest deals on store cards, and offering zero payments for months to a year or more! The peril in these deals is that you’ll buy that new sofa with a “no payments until 2012” offer and forget about it until 2012 rolls around. Just be aware of the terms of the purchase and don’t get bitten yourself by the terms.
Technological improvements mean less inventory slack
To avoid the problems caused by economic slowdowns, many companies are turning increasingly to technology in order to gain more control over their supply lines. With modern inventory planning and management software, companies no longer have to guess at how much merchandise to stock on the shelves. They often have up to the day (if not up to the minute) tracking data to inform them of which locations are selling and which ones aren’t. They can also transfer inventory and re-route trucks before they leave the distribution center to compensate for such changes in location specific sales. The result of all this is that there is much less overstocked merchandise that the retailer needs to unload, thus limiting some of the impetus for big sales. This is why you’re likely to get better deals closer to Thanksgiving than Christmas this year; retailers will have had time to adjust to the slowing economy.
Yes, there is much economic gloom out there, but there are also many silver linings for consumers. Just keep a sharp eye for deals and the details of the deals, and don’t wait too long or those deals may pass you by.