(Photo by Tim Parkinson)
If you’ve been reading this blog very long you may have picked up on the fact that I don’t like consumer debt, frivolous purchases, and the consumerist mentality our country maintains. I do like increasing savings rates and paying off debt.
On the other hand I do believe that life is for living. You must strike a balance between being a hermit without any friends or possessions and being a spendthrift that racks up a bunch of credit card debt.
Waiting for Holiday Sales Will Pay Off
That having been said if you need to make a significant purchase this year — say a new TV, computer, or furniture — you will be best served by waiting until the big sales during the actual holiday season.
Here’s the basic premise: our economy has been fueled by consumer spending for a long time. With the housing bubble and ever-increasing home values it was a free-for-all in terms of spending home equity. With home equity lines of credit consumers were able to use their homes as ATMs — and then sell at a higher price, pocket the profit, and then go out and buy even nicer homes, televisions, and cars.
The Consumerism Economy is Grinding to a Halt
As you must be aware of by now, our economy is going through a period of “correction”. Home values are plummeting in some areas, unemployment is rising, and the stock market is pricing in lower profits for companies moving forward. (That and panic selling is a basic explanation of why it has tanked over the last few months.)
Those home-value driven purchases are beginning to dwindle. Retailers consistently count on the holiday season to get back into the black — that is, the holiday season is key for retailers to turn a profit for the year. But with the economy slowing down and — gasp — Americans remembering how to save a little bit of money, things like grim for retailers.
I’ve read a couple of reports stating there will be a handful of well known retailers that we have today that will be gone by the end of the first or second quarter of 2009.
Some Evidence Retailers are Hitting Hard Times:
- The Consumerist is reporting that Circuit City is closing 155 of its 660 stores sometime this week.
- Linens ‘N Things is liquidating — not restructuring — the last of its remaining stores. (Reuters)
What does all of this mean for you?
Deals and Sales to Drive Foot Traffic to Stores
Retailers are not ignorant of the facts above. To drive foot traffic — and hopefully sales — to their stores, expect large sales. Pretty much anything to get people into a store to spend money.
I would imagine electronic retailers like Best Buy would offer big discounts on big items. Anything from TVs to cameras to laptops to refrigerators.
You may see some of those items on sale right now, but don’t buy. Hold off. They’re trying to snag you with smaller discounts now. Hold out and wait for the big deals right around Thanksgiving in Christmas.
Even with all of the discounting I would expect several retailers to disappear between this year and next.
What do you think? Are you planning any big purchases coming up? Do you think you will wait or just buy as soon as you can?
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I’m holding out for Black Friday. With the way the economy is going, I have a feeling there are going to be some amazing deals to be had.
My HDTV just stopped working. I’ve been debating between repairing it for a cost of 50% of a new one (and who knows if the problem won’t happen again) or going out and buying new. I’m holding out for Black Friday and hoping to find something good. I’ve read that typically the holidays aren’t where you’ll find the best deals on a TV, but I’m hoping this year will be different.
There are so few things I actually want/need to buy, either right now or for the foreseeable future that I would probably be inclined to just take the best offer when I’m ready to buy. I’m talking about little things like restocking my facial moisturizer, the tick repellent for my cat, and replacing a few broken kitchen tools. I may be able to save a few bucks with a little shopping around, but nothing too outrageous. Honestly, the sales don’t affect me much, so they don’t interest me. What I buy is driven by actual needs, not by what happens to be on sale. I’m just replacing the things we’ve used up, basically.
@Seb: That’s what we’re doing. I saw a Lenovo Ideapad online the other day for $477 though… very tempting.
@Laura: Wow. How long have you had it? Will it fall under a manufacturer’s warranty? What brand? I think this year will be different for TVs. Retailers are really hurting — see Circuit City’s bankruptcy plans.
@Kate: Excellent point. I won’t go out and buy a new refrigerator just because its on sale. Granted, a TV and a laptop are wants not needs… but I don’t buy just for the sake of a “good deal”.
I’ve had the TV for 3 years, so it’s no longer covered by warranty. It’s a Samsung, and as soon as I Googled “Samsung warranty” I saw tons of negative posts about Samsungs, but I’m sure that’s the case with other brands. While I don’t like to see companies going out of business, I’m hoping I can get a great deal this season!