As inflation looms, shoppers are expected to stock up on household essentials over Prime Day

Amazon’s Prime Day is here but it’s likely to be a challenging one thanks to headwinds like inflation.

JP Morgan is predicting that Prime Day sales will be close to flat, projecting that total event revenue from the two-day shopping holiday to be up 5% year-over-year. Some brands plan to reduce their discounts, offload overstocked merchandise and approach one of the biggest shopping events of the year more judiciously as inflation keeps consumer demand in check.

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But the reality is consumers are still looking for a bargain. This Prime Day could potentially be a window into consumer preferences amid a highly uncertain macroeconomic environment, as inflation continues to rise. While Prime Day has historically been a time for Amazon to promote consumer electronics like its Alexa devices, experts indicate that categories like personal care, pet products, consumer goods and clothes are expected to perform well this year.

While not all of the Prime Day deals are publicly available yet, Amazon has been dropping signs about what to expect. In June, Amazon showed an array of hand-picked home products, clothing, bags and cosmetics to some participants of its influencer program to help them create content for Prime Day deals. Summertime clothing for women, the iPhone 13 Pro Max case and women’s 4th of July shirts have been among the top five items searched on Amazon last week, according to CrunchGrowth data reviewed by Modern Retail.

While numbers only tell part of the story, consumer spending has been hurt by inflation. In May, consumer inflation in the United States increased 8.6% to reach its highest level in over 40 years. Some 73% of consumers are anticipating further price hikes in the near future, according to a March poll by Gartner.

“Given this, we anticipate consumers will shop Prime Day with a price and value mindset,” said Kassi Socha, director analyst at research firm Gartner in an emailed response. 

Gartner’s Socha predicts consumers will be shopping for “everyday household products and personal care items where they’ve observed a significant price hike due to inflationary pressures.”

According to a July 6 study of 1,000 Americans, by Algolia, a tech company that helps retailers in maximizing their online sales, 44% of shoppers say they plan to spend less on Amazon Prime Day this year compared to last year.

“Given rising inventory woes that many brands are facing, we anticipate they’ll partner with Amazon to focus on promoting overstocked items such as furniture, home décor, personal electronics, and apparel,” added Socha.

Competitors like Walmart and Target will likely also flex their strengths on Prime Day as they conduct parallel promotions, touting benefits like same-day delivery and no membership fees.

Maureen Noonan, head of retail and CPG brands at LiveRamp, said that in speaking with some of the company’s big-box retail clients, they anticipate summer sales will be dominated by school supplies, such as laptops and dorm furnishings as well as small kitchen equipment like air fryers and coffee makers. LiveRamp helps companies merge online and offline data, and its retail customers include Walmart, Sam’s Club, Carrefour and Boots.

“We may also see higher sales across luggage and travel accessories as travel continues to return to pre-pandemic level,” added Noonan.

Kiri Masters, head of retail marketplace strategy at growth marketing firm Acadia said purchases of clothing items for the workplace, vacation trips and dining out are also increasing.

“I’m expecting electronics and home goods to be less popular this year because a lot of those purchases have already been made, and so demand is going to be a little softer in those categories,” she added.

Amazon sold $11.2 billion worth of items during Prime Day 2021, according to projections from market research firm Digital Commerce 360, a 7.7% increase over $10.4 billion in 2020. Apple Watches, laptops, air fryers and television sets were the most searched for items last year on Prime Day, according to CrunchGrowth data cited above.

Fearing a less-than-rousing response to Prime Day, Amazon has started a “shop early deals” button on its home page to show some of the current promotions Amazon is offering.

E-commerce accelerator Pattern, one of the largest entities selling on Amazon based on revenue, expects pet products and consumer electronics sales to increase in 2022. 

“A lot of people bought pets over the last two years and so this might be the first regular Prime Day for all those new pet owners,” said Thomas Baker, who runs an Amazon marketing agency Fordebaker in the U.K. Baker said that pets is one of the few categories that has yet to see a decrease in demand following the pandemic, and anticipates pet products will do substantial numbers on Prime Day.

While overall consumers might be feeling stressed about rising inflation, they’re always looking for a steal, said Philip Masiello, founder and chief executive of e-commerce agency CrunchGrowth. 

“I think the sales will be lower but I think the categories that sell or the products that sell would be very similar to years past. There will be less splurging, people will be more focused on the must-haves rather than the nice-haves. But I don’t think it’s going to be devastatingly bad,” said Masiello.

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