Holiday Shopping: The Cost of Waiting
Discounts on last-minute purchases may be fewer and harder to find this year, experts say.
AnnaMaria Andriotis / SmartMoney
Patience often pays off during the holiday shopping season. But people who wait too long to make big-ticket purchases this year may end up paying higher prices.
Retail experts say consumers who hold off on holiday shopping until the last two weeks of December are most at risk of missing deals. By then, most discounts on electronics and home appliances will be smaller, says Jeff Green, an independent retail consultant in Phoenix, Ariz. “Year-end” car sales are also thinning; cash-back offers on many SUVs and pickup trucks are now less than half what they were a month ago, according to Edmunds.com. Domestic airline ticket prices for Thanksgiving, meanwhile, are already up 6% from year ago — two percentage points higher than in September — according to Travelocity.
The trend of rising prices is a sharp reversal from previous years, when retailers and manufacturers were eager to lower prices to unload excess inventory. But this year car lots and retailers are less stocked, experts say, and so are less inclined to offer big discounts. This all comes as more Americans are looking to make big-ticket purchases in the next few months. On some of those products, demand is now higher than it was before the recession. In October, more consumers said they plan to a buy car, home appliances, or a computer over the next few months than they did in October 2007, according to BIGResearch, which tracks retail trends.
To be sure, not all last-minute deals are expected to disappear. To begin with, if consumers become gun-shy again, retailers will likely cut prices, says Jason Baker, co-founder and principal at Baker Katz, a Houston-based retail brokerage firm. (The National Retail Federation expects consumer demand this holiday season to be lower than last year, but that includes smaller, everyday products as well, says an NRF spokeswoman.) And some consumers willing to wait until a few days before or after the holidays could find bargains on those items that are still available.
For savvy shoppers, here are three big-ticket holiday purchases that are getting more expensive and ways to save.
Electronics and Appliances
Consumer demand for appliances and computers up this year. Meanwhile, there isn’t much inventory to go around, especially at the brisk pace electronics have been selling, says Shawn DuBravac, chief economist at the Consumer Electronics Association. “I don’t expect inventory to grow at all — we’re not looking at a surplus of anything across the board,” he says. As a result, consumers may face the likelihood of either not finding the actual products they want in mid-December or not getting a discount, he says.
Some retailers are offering price guarantees that can help consumers save. Consumers who buy electronics (and other items) at Walmart from Nov. 1 through Dec. 25, but then find the same exact product at a lower price at another store, will be able to receive a Walmart gift card for the price difference. For electronics bought between Nov. 13 through Dec. 24 (excluding Thanksgiving Day and Nov. 28), Best Buy says it will match the prices on identical products offered by its competitors.
Traditionally, the best car deals are offered during the year-end car sales season, which starts in October and peaks in December. So far, the opposite seems to be happening for many models. Though deals can vary by location, in October car buyers could get up to $4,000 cash back on the 2011 Chrysler Town & Country, up to $3,500 on the 2011 Dodge Ram Pickup 3500, and up to $3,000 on the 2011 Ford Escape. As of press time, those cash back offers have been scaled back to up to $1,000 in many locations. (To be sure, these deals can change often, so consumers might want to stay on top of incentive changes.)
Part of the problem for shoppers: there’s limited 2011 inventory to choose from, says Alec Gutierrez, manager of vehicle valuation at Kelley Blue Book. Cars are selling relatively fast (car sales are up 9% from a year ago) and car inventory is down (due largely to natural disasters in Asia). That means consumers won’t see all that many 2011 models lingering on the lots. They should also expect fewer choices when it comes to car colors and features, he says. Consumers who have to buy a car by the end of the year and don’t mind these limitations could be best off waiting until the middle of December, says Jeremy Anwyl, CEO at Edmunds.com. That’s when manufacturers could roll out their best deals in order to get rid of any remaining 2011 inventory before the year changes.
Experts say waiting until the last minute to book Thanksgiving or holiday airfare in order to get a deal is unlikely to pan out this year . The same holds true for New Year’s and travel well into 2012. That’s largely because airlines are reducing some flights, and less supply often results in higher prices. For example, a Delta spokesman says the company will be reducing capacity next year by about 2% and that much of it will be on its trans-Atlantic routes. Last month, American Airlines said it would retire up to 11 aircraft next year citing the uncertain economic environment in a company statement.
Indeed, some airlines say they expect to have less trouble filling seats next year, says a spokeswoman at Expedia.com. In fact, on some routes, consumer demand is already up. For example, AAA Travel vacation bookings (airfare and hotel purchased as a package) from the U.S. to Europe during the first quarter of 2012 are 15% higher than they were at this point last year for the first quarter of 2011. Similarly, bookings for travel during the second quarter of 2012 are up 21% compared to last year. Travelers should try to search for flights early on and to consider booking airfare when the price appears relatively affordable, says George Hobica, publisher of Airfarewatchdog.com. “I wouldn’t wait until the last minute because that doesn’t really work anymore.”