Here’s What Inflation Could Mean for Prime Day Deals
Amazon’s much-anticipated Prime Day event is coming on June 21 and 22. And unlike past years, this installment of the annual sale coincides with a reopening economy and climbing inflation.
In May, the consumer price index — which measures the change in prices that consumers pay for goods and services — rose 5% for all items over the previous 12 months, according to the U.S. Bureau of Labor Statistics. That’s the largest year-over-year increase since 2008.
So how will this affect the deals surrounding Prime Day? Here’s what shoppers should know.
Will inflation impact Prime Day deals?
The short answer is yes. Consumer dollars don’t stretch as far during inflation periods. Shoppers are bound to see higher prices (or smaller discounts) from retailers this year. For example, Amazon has an early deal on the Echo Show 5 smart display for $44.99 (usually $79.99). The same deal was offered last year, but the list price was $89.99 at the time, so that discount was bigger.
The longer answer: “It will depend a lot on what you’re buying,” says Aaron Cheris, head of the Americas retail practice at Bain & Company, a management consultancy firm.
Demand has been building as the nation’s COVID outlook has improved.
“Due to a lack of spending during the pandemic and the receipt of fiscal stimulus checks, consumers are sitting on a lot of savings,” said Michelle Connell, a chartered financial analyst and owner of Portia Capital Management, in an email.
Now, consumers are starting to spend again, which is contributing to rising prices for certain goods. So what’s in demand and potentially going to be more expensive? Categories that consumers largely ignored during the past year, like beauty, footwear and outdoor recreation, Cheris says. But there’s still an appetite for some popular pandemic purchases, including pet care and household products.
Inflation also has hit some categories harder than others because of supply chain snags and the cost of raw materials, such as aluminum and lumber. A shortage of semiconductor chips, which are used in major appliances, computers and other tech products, is driving up the price of those items.
But cost isn’t the only thing to watch for on Prime Day. Cheris suspects shoppers will run into more stock shortages and longer delivery times for many items due to high demand and supply constraints.
Are Prime Day sales worth shopping?
Amazon’s Prime Day and rival retailer sales still hold value. These shopping events typically offer some of the year’s biggest discounts on personal electronics, kitchen gadgets and more. Amazon is known to significantly mark down its own products, including Echo and Kindle devices.
While deals on new tech might be harder to find right now, Prime Day and similar sales can be excellent opportunities to find steep savings on older products.
“One strategy that brands employ is liquidating inventory because they’re coming out with a new model,” says Nich Weinheimer, general manager of commerce strategy and retail media at Skai, a global marketing platform. “That’s very common, especially in consumer electronics where the next new TV is coming out for the big TV manufacturer.”
It’s also possible that retailers will offer better deals later in the year. Major sales will return as we approach the back-to-school season and Black Friday, a shopping holiday that far more retailers participate in than Prime Day. However, the Federal Reserve recently projected that inflation will rise higher than previously expected by the end of 2021, and many experts believe consumers will see a long-term impact.
“There’s a high probability that inflation is not the ‘transitory’ animal that the Federal Reserve keeps claiming,” Connell said, pointing to lingering factors such as higher shipping and labor costs.
As long as supply and demand issues persist, Cheris warns that shoppers who wait risk missing the boat on inventory, as with a bicycle shortage that cropped up in 2020.
“If you waited until Christmas last year to buy little Timmy a bike, you probably didn’t end up with a bike, or at least not the one that he wanted,” Cheris says.
So if there’s something you’re eyeing, holding off may not work in your favor.
How can you get the best deals?
Get your wish list (and budget) ready and start researching prices now. Price-tracking and comparison tools like Honey and CamelCamelCamel can help you determine whether you’re getting a good deal.
While Prime Day doesn’t officially start until midnight Pacific time on June 21, Amazon is rolling out early deals leading up to it. To shop the limited-time discounts, you’ll need a Prime membership.
Copycat events from competing retailers are popping up, too. Among the already announced sales:
Best Buy’s The Bigger Deal sale, underway now, ends June 22. It includes reduced prices on headphones, Apple products and more.
The Kohl’s Wow Deals event is happening in stores and online on June 21 and 22. The sale will feature discounts on hundreds of items in home, toys, beauty and apparel categories, according to the retailer.
Target is holding a three-day-long, online-only Target Deal Days sale, from June 20 through 22. The retailer promises hundreds of thousands of discounts across all categories.
Walmart’s Deals for Days sale lasts from June 20 through 23. The retail giant plans to offer “Black Friday-like savings” in electronics, home, fashion and other departments online and in stores. Some deals are exclusive to in-store or online shoppers.
Watch for additional sales at other retailers around or on June 21 and 22.