A bomb cyclone of arctic snow and wind swept across the United States the week before Christmas producing flash freezing that saw temperatures drop 40 degrees in some places. The storm put an immediate halt to holiday shopping contributing to excess retail inventories. As a result, This could be the time to scoop up retail bargains.
Most retailers were already overstocked before the holiday shopping season began. The glut of goods arose from desperate attempts to get products during the pandemic. When the supply chain began to unsnarl, retailers found they had gone from not enough to too much inventory.
Retailers already had 17 percent more inventory in October than last year, according to the U. S. Department of Commerce.
“It’s the classic supply and demand problem,” said David Berliner, head of BDO’s restructuring and turnaround services. “In a perfect, balanced world where the demand equals supply, it’s much easier to predict what your prices are going to be, how much to order. But once the demand and supply get out of sync, it leads to the problems that we’re seeing here.”
Sales, Sales, Sales
The inventory problem for retailers presents a buying opportunity for shoppers.
“We could see some big discounting with retailers desperate to clear the inventory now,” said Sonia Lapinsky. She is the managing director at turnaround and restructuring firm AlixPartners. “Once we get into January, it becomes ‘dead time’ for retailers.”
That dead time may be when some of the best bargains of the year come to life. What is more, you may not have to strain your budget if your holiday booty includes gift cards.
“The average consumer is going to love January,” Rich Hollander of sales management firm Axcelora told WBRC news.”And remember, a lot of people got gift cards. Retailers can’t recognize that income until the gift card has been spent and the retailers will work hard to get them to spend it with them.”
January is important to many sellers because this month is the end of their fiscal year. A good January could determine a seller’s success for the entire year. In some cases, it could determine if a seller will be around next year.
Some companies, such as Good Housekeeping and The Krazy Coupon Lady (KCL) regularly post information on January sales.
Walmart began discounting items 50 percent right after Christmas, according to KCL. However, that figure has already jumped to 75 percent and will climb to 90 percent in a day to two. Similar escalating discounts can be found at other major retailers.
While many stores tout savings on Christmas items, there are also bargains to be found among less seasonal goods. Clothing, houseware, toys, cosmetics, and jewelry are just some of the items on sale.
Though store prices may be correct, many consumers may not have the extra funds to take advantage of bargains.
Credit card debt in America has increased by 15 percent from the third quarter of 2021 to the third quarter of 2022. That is the largest annual increase in 20 years, according to the Federal Reserve Bank of New York.
As credit card balances have climbed, personal saving rates have fallen. The rate at which Americans saved in November was 2.4 percent, according to the Bureau of Economic Analysis. That was a slight uptick of .01 percent from October. However, it was still near the all-time low of 2.2 percent set in 2005 and way off the 6.9 percent rate of last November.
When You Should Not Buy
You should not take advantage of after-Christmas sales if the extra spending puts you in a financial bind. It is not uncommon to go on a holiday and post-holiday spending bender only to wake up later with a financial hangover.
According to a TD Bank survey, 69 percent of consumers have overspent during past holidays. Of those, 26 percent say taking advantage of holiday sales caused overspending.
“All financial situations require unique approaches that strike the right balance between saving and spending,” said Matt Boss, Head of Consumer Products at TD Bank. “For example, for those consumers who might be looking to take advantage of incentives and cash back for their holiday purchases, you might elect to use rewards or store credit cards. No matter how you choose to spend, it’s more important to spend within your means and have a plan to responsibly manage those expenses.”
If You Overspend
If your holiday spending went off the rails, here are a few steps to get your budget back on track.
- Return items purchased for yourself for a refund suggests consumer credit company myFICO. You can then use the cash to pay holiday debts.
- Revamp your budget. By taking something unnecessary out of your budget, you can free up funds to pay holiday bills.
- Improve your interest rates. If you paid for a lot of your gift-giving with a credit card, you can save by transferring the balance from a high-interest card to one with a lower APR.
- Use tax refunds and holiday bonuses to pay shopping debt. Credit reporting company Experian, says these funds should be viewed as tools to pay down shopping or other debt.
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