Now that consumers pay more each month for necessities such as food, gas, and housing, they don't have as much money left to spend on items such as electronics.
As The Wall Street Journal reported, Best Buy, a popular electronics retailer, recently indicated that there had been less demand for consumer electronics than anticipated. Best Buy attributes this partly to the effect inflation has on consumers. Best Buy's statement was made before issuing its upcoming quarterly report.
Best Buy had an increase in annual sales and profits during the last two years. This increase was in part due to customers purchasing computers. Consumers needed to buy laptops and other equipment so they could work at home and their children could attend school online due to the health crisis.
But now that people are spending less time at home, the demand for home electronics has softened. So although Best Buy expected less need for these electronics, the demand is even less than they had projected.
Best Buy joins several retailers who have modified their expected profit and sales projections. Among those retailers who have changed their expectations are Walmart, Target, Gap, and Bed Bath & Beyond.
Many of these retailers are heavily discounting items to help increase sales. To remain competitive and reduce its inventory, Best Buy must also reduce prices to help stimulate sales. This tactic will cut into Best Buy's profit margin but will benefit the consumer and help to move inventory.
Best Buy says it will look at additional options to help manage its profitability and will share that information in its upcoming second-quarter report in August.