Retails sales are down, so where are the bargains?

November 14, 2008 6:06 PM

If retailers are being hit hard with a recession, then why am I not finding bargains?

If retail sales are falling, and businesses are posting losses or cutting forecasts, then why am I not finding great bargains?

I guess a "bargain" is a subjective term. But surely there are deals to be had in this economic environment for the people who can spend?

For example - I am looking to buy/rent the following:
1. winter coat, boots (anything suitable an icy/windy winter)
2. point and shoot digital camera (Canon SD 750 or similar)
3. blackberry/smartphone/new cell service (currently with Sprint)
4. new apartment (Amarillo, TX)
5. car maintenance (timing belt/waterpump for 2000 Camry)

None of these good or services seem significantly discounted compared to when I saw them years ago. I've casually looked through sites like slickdeals.net and Black Friday ads. It looks like the same kind of stuff I've seen before.

So maybe I'm not buying the right kinds of goods and services in this economy?

Perhaps the discounts I seek don't come from business cycles but from events like seasonal changes and clearing old inventory.

Or maybe the items I'm buying have prices built in from before the financial crisis?

posted by abdulf to shopping (15 comments total)

1: Never buy in season. That's when prices are highest. Buy your Winter gear in Spring, unless current trends are a must have, in which case high prices are par for the course. I bought an awesome Mountain Hardware coat for $100 off list price this summer. The style is old, but I don't care.
2: Point and shoot cameras are insanely cheap, read reviews and determine which specs you really need, then buy from a low cost but reputable dealer. Unless there's something you really need/want in the 750 there are many cameras in that line that vary in price by almost $100. Or research CHDK and use it to get a kickass camera at a low end price.
3: Cell phone service won't become cheaper for a long while. People depend on it, and are willing to sacrifice other expenses to pay for it. (Hypothetical: You're a parent of three kids with a long/complicated daily commute. Do you buy the generic green beans or cancel your cell phone account?) At this point I think it will take a Ma Bell level lawsuit to bring cell prices down.
4: People are losing their houses by thousands or hundreds of thousands in each finance report I read. Those people need a place to stay so they look for apartments. You're in a seller's market, so if the rental price is less than a mortgage you'll have tons of people competing with you.
5: People are desperate not to buy a new car when they are out of a job and at risk of losing their home. Therefore they spend what they can on repairs from skilled mechanics. $1200 bucks now is a lot cheaper than $20,000 over the next 4-5 years. Supply and demand. Even if hourly labor prices haven't changed there is a higher demand for parts, thus an increase in repair prices.
posted by Science! at 6:44 PM on November 14, 2008

Well, yes, maybe you are looking for the wrong sort of bargains.

Winter outerwear is seasonal, and in North Texas you should be hitting a peak demand right now. Here in Houston, we're expecting your cold weather this weekend. There are big sales on fall and summer-weight clothes.

Now, apartments in Texas: We never had the big run-up in costs that the coasts did, so there isn't a big slump in prices now. The foreclosures in Texas generally are not as bad here as elsewhere, so that probably is not as big a factor in rents. Unless, of course, you were in Galveston or a coastal county instead of Amarillo; costs there are sharply up since Ike and the housing shortage.

Car repair is a not as "elastic" as some goods and services; when you need a water pump replaced, you need it and you go ahead and pay for it. I had one blow out on I-35 once, and believe me, I didn't bargain! You said "maintenance," but I think of that as more like changing the oil, which (some of us) might defer an extra month or two or three.

On the smartphones, their cost is already deeply subsidized when you sign up for a new two year contract. You might find more competition in the terms of service, rather than in the phones themselves.

As for the camera, well, I got nothin'.
posted by Robert Angelo at 6:48 PM on November 14, 2008

I think Robert Angelo's answer about car repairs is better than mine. A mechanic doesn't keep every water pump in stock, he orders them from a supplier who orders them from a supplier, etc, so the prices will take a very long time to come down when the suppliers bought them months, a year, or more ago. He's probably more accurate on the housing issue too, but don't discount that every month the economy is in the tank more people are moving closer to family, or cheaper areas and affecting housing costs.
posted by Science! at 7:03 PM on November 14, 2008

Maybe you are shopping for the wrong things? I was just remarking to my boyfriend about the enormous number of sale announcements I've been getting from clothing retailers. Just in the past week there have been sales at J. Crew, Banana Republic/Gap/Old Navy and Bluefly with substantial cuts of 20-30 %. I just bought a pair of cashmere lined leather gloves from Amazon for $25 (a week ago they were $50) and a new really warm winter coat for $90 including shipping (this was at 30 % discount as well).
Regarding the items on your list:
I think you should be able to find a winter coat and boots for a reasonable price, but that's something that people are often willing to pay a premium for since they're something they're going to wear all winter long. Plus it's getting cold and people are getting desperate.
Surprised that you're not able to find a cheap point and shoot digital camera. It was my impression that these were getting unbelievably cheap these days.
Again, people are willing to pay for phones. You're more likely to find deals in areas that are more heavily hit by a decrease in discretionary spending levels.
Rents don't necessarily have to decrease in such an economy. With house prices as low as they people may not be sure that the market has hit rock bottom yet and may put off house purchases in favor of renting.
Don't have a car, so really have no clue about car repair.
posted by peacheater at 7:24 PM on November 14, 2008

Actually, more often than not, recessions are accompanied by inflation and rising prices, just hold on, it's coming.
posted by Cosine at 9:12 PM on November 14, 2008

Fellow Texas panhandle resident here

I echo the sentiments above about winter clothing, now really is the wrong time to try to buy. We're experiencing our first real cold snap circa *right now* so I'd say hold off a bit.

As for the digital camera, there is a certain cost of production that you're probably not going to be able to get under, but the Friday after Thanksgiving would probably be a better time to get a good deal on one than waiting on recessionary effects.

Cell phones are sort of viewed as a commodity by the current 20-somethings, so I think you'll see people making sacrifices elsewhere in their lifestyles to maintain their current level of tech in terms of cell phones.

As for apartments, I've actually seen my rent go *up* over the last few years. This part of the world is more or less insulated from the craziness, as we're pretty desolate and isolated. I'd also say this isn't a renter's market, as most people have a desire to own their own home and the median home price in relation to annual salary has been low for so long, the competition for long-term rental living space is pretty scarce.

Also, Texas is a state known for every person having his or her own car. In that kind of market, you can't expect to see much of a decrease in cost because every person needs to keep his car running to get to/from work.
posted by conradjones at 10:08 PM on November 14, 2008

I agree that these are just not items where you are going to find steep recessionary discounts. You'll want to think in terms of things that are likely to be held in inventory in volume that will not be depleted unless discounted. A lot of retailers are running scared this season, and there are going to be a number of closures come January, either non-performing stores or even whole chains. You may see frenzied discounting as Christmas approaches, to get as much profit in as possible; ginormous after-Christmas sales; and then inventory clearance sales in the new year.

Price shopping is something you can do with anything, but patience is definitely a virtue, because if you want it now then so do a lot of other people and thus demand and price remain high.

Over 2009 generally you will probably see a lot of bargains in sectors that are basically "wants", that is luxuries, as opposed to "needs". This year there have been a ton of SUVs on sale, as well as various second cars, e.g. daddy's Corvette. But Toyota Corollas are sold five minutes after they go on sale.

Finally, when you're thinking of car repairs, realize that the cost structure is going to remain about the same over a long period of time -- parts, building rent, salaries are all relatively fixed costs. If people suddenly stopped driving cars, then you'd have too many car repair places, and prices would begin to slowly drop. But more likely what you'll see is little change in the price points for this type of service, and simply a contraction of the number of vendors.
posted by dhartung at 10:52 PM on November 14, 2008

If the retailers don't have much money coming in, they aren't going to set things up so they have even less money coming in. If they make a sale, they want it to be at full price. When the financial climate was better, they could afford to knock 20% off. Now, they're running close to the wind, and that 20% off means a lot more than it used to.
posted by Solomon at 1:39 AM on November 15, 2008

Joseph A. Banks is having a two day (Nov 14/15) sale on a lot of things, including extremely deep discounts on winter coats. If I had the spare cash laying around, I would've bought them out. They also have leather jackets at half price, but still not cheap.

Jacket I'd get if my budget wasn't crying: 3/4 Length Merino Wool Topcoat - $395.00 $139.00

I've seen some previews of a few Black Friday ads and there will be some very deep discounts available this year, but they're mainly focused on consumer electronics at department stores and the like. Clothes, I'm not so sure.
posted by empyrean at 2:29 AM on November 15, 2008

dhgartung wrote: Over 2009 generally you will probably see a lot of bargains in sectors that are basically "wants", that is luxuries, as opposed to "needs". This year there have been a ton of SUVs on sale, as well as various second cars, e.g. daddy's Corvette. But Toyota Corollas are sold five minutes after they go on sale.

This.

I got an amazing deal on a new bed recently and have been bugged by Toyota wanting my Corolla to sell it because there is such a demand (I know they obviously want me to buy a new one as well).

You'll find sales on the things that aren't necessities for people right now, like electronics, toys, jewelry and the like.
posted by NoraCharles at 7:51 AM on November 15, 2008

You'll never find "slashed prices" for car repair, because they know they have you. What are you going to do? Fix it yourself? or sell it with a broken water pump and then buy a new car?

look on jr.com for the camera and then ask them to ship it free.
posted by Zambrano at 8:48 AM on November 15, 2008

Abercrombie and Fitch, which just announced a 28% year-over-year decline in 3Q sales, also announced that they would not be cutting ticket prices, because "they feared it would damage their brand."

We are coming into the holiday season. Most retailers break even for the year - go from the red into the black - on the Friday after Thanksgiving, when a lot of holiday shopping gets done. Because there is a lot of buying "built-in" to this season - a lot of people would sooner go without food than without giving holiday gifts - it is a time when, marketing aside, prices are not as good as they are at other times of the year.

Keep looking, at least for the camera and the clothes. You'll find a deal somewhere.
posted by ikkyu2 at 10:27 AM on November 15, 2008

Actually, more often than not, recessions are accompanied by inflation and rising prices, just hold on, it's coming.

Not during the Great Depression. We have a huge decline in real wages, interest rates approaching 0%, and a huge decline in consumer demand. Prices are not going to rise. Look up the term, "deflationary spiral."
posted by Thoughtcrime at 3:04 PM on November 15, 2008

Nope, google "inflation recession", in four out of the last five recessions prices for retail goods showed higher rates of inflation than in the preceding decade.
posted by Cosine at 1:12 AM on November 16, 2008

Three easy explanations:

One

Two

Three
posted by Cosine at 1:14 AM on November 16, 2008