As the home appliance analyst, one of the questions I’m asked most frequently is ‘When is the best time to buy a new appliance?’ Unlike many of the categories we monitor at gap intelligence, appliances are not impulse purchases. Very rarely will you find a consumer browsing an appliance floor room and decide that they just can’t go home without the brand-new refrigerator model that recently arrived in retail locations. Rather, appliances are a needs-based purchase and more often than not, a fairly expensive one. Consumers are savvy, more educated with an arsenal of research than ever before, and always looking for a good deal. So…when is the best time to buy an appliance? Do major holiday periods live up to the hype of delivering deep discounts or is it mere marketing tactics to lure consumers into the stores?
It goes without saying that manufacturers and retailers invest a significant amount of their respective marketing budgets on printed and online promotional features and in doing so, attach attractive incentive values. In addition to holiday specific and print promotions, in-store incentives play a significant factor in the sales process, often times comprising approximately 80% of a retailer’s assortment week over week. What does that mean to a consumer? Imagine that Jane sees a Best Buy print ad for a brand new French-door refrigerator. Jane is in the market for a new refrigerator but wants to make sure that considering the high ticket price tag, she gets the best deal possible. As featured in Best Buy’s ad, that particular refrigerator is discounted by approximately $1,000; representative of a 30% discount. Jane thinks to herself ‘What a great deal! I’m going to go down to my local store and check it out in person.’ When Jane arrives at her local Best Buy, she spots the advertised refrigerator but also quickly notices that there is a robust assortment of products with equally attractive incentive values that were not featured in the retailer’s ad. Suddenly, Jane has a much bigger decision to make within the competitive appliance assortment.
In many ways, major appliance promotions behave differently than the majority of CE categories that are also tracked at gap intelligence. One of the ways that is largely unique to appliances is the aforementioned sheer volume of in-store promotions. During a peak holiday period (such as this recent July 4th holiday), there were approximately 10 in-store promotions for every 1 print ad. Another way of looking at this is the percentage of a retailer’s portfolio carrying an in-store only promotion during the holiday period: 48%. To have more than half of a retailer’s portfolio carrying some type of promotion is substantial!
Also interesting to notate from a consumer perspective is the manner in which retailers promote during holiday periods. Competing chains tend to promote products similarly. For example, Home Depot and Lowe’s behave similarly in the way that they advertise in much the same way as regional resellers ABC Warehouse, BrandsMart, and RC WIlley. The regional retailers allot a substantial portion of their promotional activity to print ads and do not ‘discount’ in –store in the traditional manner of listing in-store instant savings. Instead, the regional aforementioned retailers adjust hard shelf prices week-over-week.
What type of promo holds the most lucrative offer?
One might assume that because of the large volume of in-store incentives that they are the more attractive offer and provide the best value, although this isn’t necessarily true. Typically, print ads carry the most attractive incentive values. By our methodology, the incentive value is calculated as the percentage of promotion off of the shelf price.
Let’s revisit Jane shopping for a new French-door at Best Buy. Her printed ad shows a refrigerator priced regularly at $1,699, a $700 incentive value, and resulting out-the-door price of $999. This model carries an incentive value of 41%. While in the store, however, Jane notices a competing brand and similar model featured with an in-store only 30% discount. Which model should she choose? In the chart below, retailer’s promotional strategies are revealed in part through attached incentive values. During the 4th of July period, the retailers within gap intelligence’s panel attached an average print ad incentive value of 29% in comparison to an average in-store incentive value of 20%. What does this mean to a consumer? On average during a key holiday period, a shopper will more likely than not receive the most value purchasing a product promoted in a printed ad over those discounted in-store only.
This leads us to answer the question we started with…
Will a consumer get a better deal during a holiday period? The short answer is… yes. Not only do the number of advertisements and in-store incentives increase during peak holiday periods, but on average, so do the attached incentive values.With that being said, there are instances where retailers will inflate MSRP to produce the illusion of deeper discounts, although on average, incentive values peak during holiday periods. Historically, 4th of July is one of the most highly advertised appliance periods, followed by Memorial Day, President’s Day, and lastly Labor Day. It should be noted that Black Friday, despite its popularity with CE categories, has not trended as a significant appliance buying holiday and you likely won’t find any rock-bottom doorbuster prices on major appliances.
All in all, any major US holiday is a great time to get good deals on major appliances. Be sure to do some research around features, capacity, and Energy Star ratings and you’re bound to have a successful appliance buying experience!