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Expert Alert: Navigating Holiday Shopping Amid Inflation

 

October 11, 2022



MINNEAPOLIS/ST. PAUL (10/10/2022) — The shadow of 40-year high inflation and the looming recession threaten to impact the upcoming holiday shopping season. As a result, companies are rolling out sales campaigns, such as Amazon’s October Prime Day and Target’s October Day Deals, well before Black Friday.

Carlson School of Management Professor Mark Bergen says this tactic highlights the fierce competition among retailers to reach cost-conscious consumers battling smaller budgets and rising prices.

Amid this increased pressure from retailers to buy earlier, Bergen, a pricing expert, suggests these tips for consumers to navigate the holiday shopping season amid inflation.

Mark Bergen, Ph.D.

“Coming out of the pandemic, retailers struggled to adapt to changing buyer behavior and were left with excess inventory that they had to sell at a loss. Firms are looking to rebound in sales during the holiday season, and the race is on because they know people’s budgets are much tighter than they were last year.

• Check the size. Shrinkflation is impacting everyday items from Gatorade to toilet paper. Companies are reducing the size of their products but keeping prices the same, which means consumers end up paying more for less. When filling your cart with holiday groceries, keep a watchful eye on the products' net weights and item count.

• Review the price and total dollars. More companies are offering payment plans — sometimes called Buy Now Pay Later plans — as a way for customers to purchase items. While these plans can help ease the price tag pains, make sure you understand the payment terms and that they make sense for your budget before agreeing.

• Use digital tools. Use the fierce competition to your advantage. Before buying, use digital tools or apps to compare prices with other retailers. You may stumble upon coupons or be able to set price alerts so you can be notified when an item drops to a price within your budget.

• Shop categories. It may help to be flexible with your holiday shopping. Butter prices soared this year. Choosing to bake less butter-heavy recipes like fudge or peppermint bark instead of cookies might be more economical. When it comes to gift lists, this may mean instead of buying a new computer, you purchase a new accessory like a wireless mouse for your loved one’s existing set-up.

• Shop store brands. Store brands are typically cheaper than name brands. While you may have a preference for certain brands, you may find in some cases there are few to no differences between the products — except the price.

“While consumers are already experiencing exhaustion from the ongoing inflation and recession fears, it will pay to stay vigilant when shopping this holiday season,” adds Bergen. “This is a make-or-break time for most retailers. Companies will be on the offensive to meet their sales goals and it will be up to consumers to stay budget conscious and stave off the temptation to overbuy.”

Mark Bergen, Ph.D., is the James D. Watkins Chair in Marketing at the Carlson School of Management. Bergen's research focuses on pricing and channels of distribution, where he has studied issues such as pricing as a strategic capability, price wars, pricing as truces, and how artificial intelligence can help companies set prices more ethically.

About the University of Minnesota

The University of Minnesota System, with campuses in Crookston, Duluth, Morris, Rochester, and the Twin Cities, is driven by a singular vision of excellence. We are proud of our land-grant mission of world-class education, groundbreaking research, and community-engaged outreach, and we are unified in our drive to serve Minnesota. Visit system.umn.edu.

About the Carlson School of Management

Located on the University of Minnesota Twin Cities campus, the Carlson School of Management exemplifies a commitment to excellence through a focus on experiential learning and international education, and by maintaining strong ties with the Minneapolis/Saint Paul business community. Through its undergraduate and graduate programs, the Carlson School offers access to world-renowned faculty members and an alumni network of 55,000 people. Learn more at carlsonschool.umn.edu.

 

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