Target, Best Buy and other retailers take on Amazon's Prime Day

This week has been a holiday for online deal hunters.

Major retailers — including Target, Best Buy and Macy's — ran midsummer promotions on websites and apps, going head-to-head with Amazon.com's Prime Day sale.

The promotions, most of which ended Wednesday, yielded immediate revenue for the nation's retailers as well as clues about how consumers will spend in the two big shopping periods coming up — back-to-school and the year-end holidays.

Retail analysts say it will be important to see if retailers such as Twin Cities-based Target and Best Buy shed excess merchandise as they head into the second half of the year.

"The results of these sales serve as a barometer for consumer demand, especially now as inflation takes a bite out of household budgets," said Carol Spieckerman, retail consultant and president of Spieckerman Retail. "Parsing the data this month will give Best Buy and Target a nice runway to plot holiday pricing strategy."

Since it launched in 2015, Amazon's Prime Day has become a well-known sales event for consumers to snag big deals on everything from popular electronics to premium cosmetics.

"Consumers love to take advantage of good deals, whether they need them or not," said Marshal Cohen, chief industry advisor for consumer data company the NPD Group.

He added in a statement, "The spending results from these promotional events could also present a signal of things to come, as there may be some hesitation from consumers, as they begin to shift into a different spending pattern."

According to Chicago-based data analytics company NielsenIQ, of the consumers the company surveyed this month who said they planned to shop Prime Day sales, the majority (56%) said they planned to spend more than they did last year. This comes even as U.S. consumer prices rose 9.1% in June, a new peak in an inflation surge that began a year ago.

Carman Allison, a vice president at NielsenIQ, said that the high cost of gasoline is leading shoppers to shift "more of their purchases online versus driving to a store."

Amazon's Prime Day is known for deals on electronics. But this year, 58% of consumers surveyed said they would shop for household products and 28% said food and beverages.

"I think the environment is really different this year," said Neil Saunders, managing director of data analytics firm GlobalData's retail division, in an interview with the Star Tribune. "[Consumers] are not doing as much impulse buying."

Analysts and investors will also watch for evidence that retailers were able to sell down items that have been slow to move. In the first part of the year, store chains struggled to adjust as items that were popular during the pandemic, such as furniture and televisions, stacked up when people began spending more on services and travel.

Last month, Minneapolis-based Target announced it would cut prices and cancel orders to trim its inventory, which ballooned 43% in its first quarter.

Best Buy's inventory growth was much more moderate. But CEO Corie Barry said the consumer electronics market had become more promotional than expected for some products, putting a squeeze on its profitability.

If retailers aren't able to balance their inventory soon, they might be pressured to further slash prices in coming months to attract consumers, Saunders said.

"We may have to discount a bit more heavily to stimulate the consumers into the holidays," he said.