Millennial Money: Be ready to work for Labor Day bargains
This Labor Day, some Americans will have extra cash on hand for holiday weekend shopping.
Some people padded their savings accounts by staying home during the pandemic. And some set aside the advance payments of the child tax credit they received, points out Amna Kirmani, marketing professor at the University of Maryland's Robert H. Smith School of Business.
But consumers who are ready to spend will face the retail impacts of the continuing pandemic, supply chain interruptions and inflation.
Labor Day savings may not be as easy to spot this year, either online or in person. In fact, for some product categories, there might not be discounts at all.
Here's what you need to know about the sales -- and why you may have to work a little harder to find what you're looking for on Sept. 6.
RETAIL FACES TOUGH SLOG
Ramping up production after last year's COVID-19 shutdowns has led to ripple effects in the retail world.
"We have consumers who are believed to have quite a bit of money in their pockets, but the retailers do not have a lot of product," says Tom Arnold, professor of finance at the University of Richmond's Robins School of Business in Virginia.
"The supply chain issues are very real in that the retailers are having a difficult time getting product, and when they do get product, they are facing a higher cost for the product."
That means some retailers are struggling just to fill their shelves. And if these stores don't have much inventory to sell in the first place, they won't be as motivated to discount the items they do have in stock.
Here's how a retailer might be thinking about inventory: "In past years, I could have 100 units, thinking I could sell 50 at regular price, the next 30 at 25% off and then clear out with half-price," Arnold says. "Well, this year I might only have 50 units and I might be able to sell all of them at regular price."
SALE CATEGORIES ARE IN FLUX
As a result, Labor Day staples like car sales, appliance deals and mattress markdowns might not be a given in 2021 -- or, not as impressive.
Products in low supply aren't expected to be discounted much, if at all. That's the case with some cars, Kirmani predicts.
You will, however, be able to find deep discounts on summer-related merchandise. Retailers will be motivated to unload whatever warm-weather inventory they have left over before consumers transition to fall. You can also expect clothing deals, as Labor Day falls within the back-to-school shopping season.
Promotions are expected to take place at big-box retailers, home improvement outlets, department stores and tech giants. For example, Wayfair, Best Buy and Macy's have been known to offer Labor Day savings.
But, again, prepare for some of the discount levels to be modest.
"I think as far as Labor Day sales, they're not going to be as good as they have been in previous years," Arnold says.
SHOPPERS HAVE TO WORK FOR DEALS
If you choose to shop over Labor Day weekend despite the challenges, here's how to maximize your money and increase your chances of finding a good deal:
-- COMPARE PRICES. Comparison shopping on the internet is the best option for finding the lowest price, according to Kirmani. Seek out deal comparison sites and sales roundups that do the homework for you, or start monitoring prices yourself before Labor Day so you can judge the value of a sale.
-- CHOOSE YOUR MODE OF SHOPPING. Browsing from home gives you the flexibility to visit countless sales in a short period of time -- and the peace of mind of staying safe during the pandemic. But if you're worried an item will be back-ordered, you may want to consider going in person instead to ensure you get what you want. Arnold anticipates the frustration of shipping delays could drive some shoppers to the store.
-- WEIGH NEEDS VERSUS WANTS. Finally, consider how badly you need a particular item, Arnold suggests. If you need it right now, get it where it's available. If you want it but could go without for a few months, try holding off until some of the supply chain issues are under control. Black Friday sales -- which Kirmani says are historically better than Labor Day -- will be coming in November. But it's difficult to predict what those sales will look like this year.
The bottom line? Arnold says you can find some "good" deals this Labor Day, but they won't be "fantastic."
This column was provided to The Associated Press by the personal finance website NerdWallet. Courtney Jespersen is a writer at NerdWallet. Email: email@example.com. Twitter: @courtneynerd.