July has emerged as a pivotal month for retail sales since Amazon launched its first Prime Day in 2015. These sales events, which now occur annually, have become critical for driving revenue during the mid-year period. Retailers capitalize on these events to attract consumers with promises of substantial savings, but personal finance experts caution shoppers to be wary of potentially misleading marketing tactics and the temptation to make impulsive purchases.
Amazon Prime Day and Rival Promotions
Amazon’s 10th Prime Day event will take place on a Tuesday and Wednesday, exclusively for Prime members who pay $14.99 monthly or $139 annually. Prime members enjoy benefits like free shipping and access to special deals. Over the years, Amazon has built significant anticipation around Prime Day, making it a major event in the retail calendar.
To compete with Amazon, rival retailers like Walmart, Target, Kohl’s, TikTok Shop, and Temu have launched their own promotions. Walmart, for instance, has been proactive in aligning its sales with Prime Day to capture some of Amazon’s customer base. Similarly, Target’s sales are available only to members of its Target Circle loyalty program. Newcomers like TikTok Shop and Temu are also trying to lure shoppers with their unique sales events. Meanwhile, Macy’s is extending its discount period with an eight-day event starting on Tuesday, aiming to provide what it calls its “best summer deals.”
These sales events serve multiple purposes for retailers. They attract early back-to-school shoppers, which is the second-most important shopping season after the winter holidays. They also stimulate discretionary spending on a variety of products, from gadgets and household items to seasonal clothing like bikinis and summer dresses. Additionally, these promotions help retailers mitigate the typical summer lull in consumer spending, which often shifts towards vacations and dining out.
Effectiveness of Prime Day Deals
The value of Prime Day deals is subject to debate. Amazon promotes its Prime Day as an opportunity for substantial savings, but the actual benefits vary. According to Santa Clara University business professor Kirthi Kalyanam, who is writing a book about Amazon, Prime Day has historically offered significant discounts on well-known brands like Apple. Amazon achieves this by incentivizing third-party sellers to lower their prices, promising prominent placement on the website.
However, the rise of competitors like Shein and Temu, known for their ultra-cheap products, has changed the landscape. These competitors often offer prices that challenge Amazon’s discounts, making some Prime Day deals less compelling.
Consumer data supports a mixed view of Prime Day discounts. Numerator, a consumer data company, reported that most shoppers surveyed during last year’s Prime Day observed discounts of up to 40%, with a quarter of items seeing discounts of 60% or more. Nonetheless, some experts argue that the perceived savings might not always be as substantial as advertised.
Bargain-Hunting and Budgeting Tips
To make the most of summer sales without falling into common pitfalls, personal finance experts offer several recommendations:
- Avoid Urgency: Mark Elliot, chief customer officer at LendingClub, advises shoppers to resist the manufactured urgency of sales events. The idea that “the more you spend, the more you save” is fundamentally misleading.
- Make a List: Dan Egan, a vice president at Betterment, recommends making a list of needed items before the sales begin. This approach helps consumers stay focused and avoid unnecessary purchases. Egan also suggests avoiding late-night shopping or browsing out of boredom, which can lead to impulsive buys.
- Be Cautious with Credit: Egan further advises shoppers with existing credit card balances to be mindful of the interest they might incur on new purchases, which could negate any savings from the sales.
- Trial Memberships: Erin Witte, director of consumer protection at the Consumer Federation of America, suggests using free or temporary memberships to access deals, but warns to set calendar reminders to cancel these memberships if they are no longer needed. Retailers often design these memberships to be easy to sign up for but challenging to cancel.
- Comparison Shopping: It’s always wise to compare prices across multiple websites before completing a purchase. This ensures that shoppers truly get the best deal available.
Retailers’ Strategies
Different retailers employ various strategies to leverage the July sales boom:
- Amazon: Exclusively for Prime members, ensuring that customers see value in maintaining their subscriptions.
- Walmart: Open to all shoppers, with early access for Walmart+ members to enhance the value of their membership.
- Target: Offers discounts through its Target Circle loyalty program and uses the event to promote a new membership program aimed at boosting sales and customer traffic.
- TikTok Shop: Opens its sales event to everyone, leveraging its popular platform to attract a wide audience.
Conclusion
Summertime sales present a significant opportunity for savings, but shoppers need to approach them with a strategic mindset. By being informed and cautious, consumers can maximize their benefits without succumbing to the common pitfalls of impulse buying and misleading promotions. Whether shopping for back-to-school essentials or seasonal items, a thoughtful approach can ensure that the savings are real and substantial.