‘BLEAK’ FRIDAY FEAR
Inflation may offset holiday appliance deals
Black Friday discounts are poised to return this fall for large appliances after two years of pandemic-induced disruptions — but even with the splashy markdowns, some shoppers may still have sticker shock.
Supply-chain snags that crimped availability of new refrigerators, gas ranges and dishwashers are mostly over for the biggest brands — raising the prospect of holiday discounts as deep as 40% on choice models from Samsung, LG, Whirlpool and GE, according to industry experts.
Those discounts, however, aren’t yet confirmed and will be off retail markups that have since risen as much as 20% since 2020, according to executives in the sector. Depending on how business goes in the coming weeks, the Black Friday “doorbuster” deals may result in final sale prices roughly in line with last year, when discounts were slim to none.
“The promotional price might be attractive compared to what something cost earlier this year, but it’s not clear that it will cost less than it did a year ago,” said John Carey, owner of Designer Appliances, which operates two upscale showrooms in New Jersey. “It might wipe out the inflation increase.”
It’s the latest bizarre twist in the US economy as the Biden administration and the Federal Reserve grapple with surging prices on everything from groceries to gasoline. Last month, prices rose a surprisingly stiff 8.3%, prompting the Fed to hike interest rates for the fifth straight time. While the Fed hopes to curb inflation across the economy, industry experts say it’s hard to predict which prices will fall and by how much.
At shopping malls, apparel retailers will be forced to take steep markdowns — as high as 55% as they scramble to clear fashions that won’t survive into next season, says Craig Johnson of Customer Growth Partners. But the picture with appliances is less clear as the surplus isn’t as great as what’s faced by clothing retailers.
Goods piling up
Manufacturers and retailers are discounting bigticket items earlier than usual as the housing market cools amid surging mortgage rates. Sales of major appliances are flat to negative year-to-date and consumer demand is down about 5% compared with a year ago, according to the industry consulting firm. Still, appliance manufacturers haven’t yet committed to many of the rebates that drive Black Friday sales.
Last year, Designer Appliances in New Jersey was offering markdowns on a mere 20 to 30 products across its stores, with anemic discounts during big sales holidays like Labor Day and Black Friday. Now, it’s offering discounts on more than 400 products as major manufacturers begin funding rebates again — but the rebates are still relatively modest, Carey says.
“What we don’t know yet is the sales rate between now and mid-November for the appliances,” Johnson said. “For the next four weeks, the manufacturers are looking at the sellthrough rate, and if it’s stronger than anticipated, they don’t have to resort to 40% off and they could go to a typical discount, maybe 15% to 25% max.”
To be sure, shoppers searching for new appliances will find more deals and variety now than at any time since the pandemic began. Port delays and shipping costs have come down dramatically this year, which has helped to refill warehouses. Lowe’s, Home Depot and Best Buy, which account for the bulk of US appliance sales, have been canceling orders to prevent a pileup of goods, industry experts tell The Post.
At Chicago-based retailer Abt, appliances are getting discounts averaging 10% “after two years of no promotions,” said Mike Abt, whose family owns the 114,000-square-foot superstore. He predicts the discounts could grow as steep as 35% in the coming weeks.
“It’s a sweet spot for consumers right now and will probably continue through the holidays,” Abt added. “We have a lot more inventory than we’ve ever had, with an unlimited supply of products in the mid- to lowend, and sales are down.”
Distribution kinks
But stepping back, Abt adds that it hasn’t been a typical time for appliance sellers. Wholesale markups are still higher than they were a year ago, and some manufacturers mainly are offering rebates on products that are not moving fast enough, like an LG Wi-Fi-enabled refrigerator that’s been reduced by $700 to $3,099.
“For two years, no one talked about marketing,” Abt said, referring to the unusual lack of markdowns. “The discounts traditionally happen by Nov. 1, and it’s even happening now, but everything went up by 20% over the past two years.”
Meanwhile, many luxury brands still appear to be working through their distribution kinks — resulting in persistently long wait times for Sub-Zero refrigerators, Viking ranges and Miele washer-dryer sets, experts said.
At Yale Appliances in Boston, new orders are down between 5% and 10%, and the upscale retailer’s sales are off by about 12% versus last year, partly because of inventory shortages, says Chief Executive Steve Sheinkopf.
“Customers still have to wait six months to a year for luxury brands,” Sheinkopf told The Post. “Miele hasn’t taken an order since last November for dishwashers.”