According to neuroscientist, Christian Elger, the human brain structure has a reward system which, when triggered, stimulates a pleasant feeling so strong that our brains tend to forget everything else at the moment. For many people, words such as ‘sale’ and ‘discount’ activate the reward system to the extent that their brains cannot rationalise whether the purchase is necessary or not. With Black Friday only a few days away, here are some points to consider.
Retailers are particularly pressured this festive season
From a retailer’s perspective, 2020 has been a rough year and, as a result, there is an enormous amount of pressure on them to achieve sales and play ‘catch-up’ this November. It’s likely that retailers will be pulling out all the stops to encourage you to shop.
The Covid-19 future remains uncertain
It is widely believed that the full economic effect of Covid-19 and the resultant lockdowns has yet to be felt, both locally and internationally. Bear in mind that, while Europe and the US are currently experiencing their third wave, South Africa has yet to face the full force of a second wave. In the face of such uncertainty, going on a spending spree this Black Friday – even if you feel that your finances can absorb it – may not be a good idea. Now’s the time to fill the war chest and gear for months of more uncertainty.
Be aware of your biases
If you do plan on shopping for budgeted necessities, be aware of the emotional and cognitive biases that you generally fall victim to. The mass consumerism, and often hysteria, that has become the hallmark of Black Friday can lead to severe FOMO (fear of missing out) which in turn can result in shoppers simply following the crowd (herd mentality) in order to take advantage of a bargain simply because everyone else is doing it.
Don’t bank on your bonus
There’s no doubt that 2020 has been a year like no other, so when it comes to planning your festive season spend, err on the side of caution and don’t bank on getting a bonus. Very few employers have been unaffected by the pandemic, and many employers who are in a position to pay bonuses may hold back until there is more certainty as to how the virus will play out over the next few months.
It’s been a rough year for everyone and it’s easy to convince yourself that you need spoiling. The reality, however, is that most South Africans are Covid-fatigued but now is not the time to make rash, emotional purchases in an attempt to cheer yourself up.
If you were forced to take premium holidays, reduce cover or put your investment contributions on hold, you may still be trying to catch up financially. Don’t let the lure of Black Friday distract you from your financial priorities. If you do have cash available, use it to settle debt, re-start your investment contributions, re-adjust your insurance cover, or boost your emergency funding.
Use your rewards programmes
If there is something you need to purchase, research whether you can purchase it using your e-bucks, miles or vouchers from your rewards programmes.
‘Shopping rush’ is a thing
According to research by English & Pfeiffer, London Metropolitan University, there are key psychological principles that drive us to buy right now – otherwise known as the ‘shopping rush’. The four big factors include the proportional size of the saving, the urgency at which you are encouraged to spend, the popularity of the item, as well as its exclusivity.
Being aware of these factors when shopping will help you to identify the marketing techniques that retailers use to heighten your ‘shopping rush’. Platforms such as ‘One Day Only’ are adept at encouraging shoppers to make urgent purchases on the basis that the discounted price is only available for a 24-hour period. Stores deliberately create artificial limitations for consumers, even though we intuitively know that there are warehouses full of products that need to be sold.
Beware of AI
If you look up a product online, know that artificial intelligence and its algorithms are going to relentlessly tempt you with seemingly bespoke adverts via your social media pages and internet scrolling. Be alert to the fact that this is a deliberate attempt to customise which adverts you see based on your internet searches and is not the universe sending you a message.
If you plan on shopping online this Black Friday, be aware of the psychological effects of buying goods online. Cashless transactions involve less emotion as we are not required to physically part with our cash. This often results in an emotional disconnect and a false sense of security, which in turn can result in overspending.
For most retailers, Black Friday is no longer just a day – it’s an entire month of specials, discounts, bargains and sales, with prices and deals fluctuating often on a daily basis. Rather than having to exercise restraint for a single day, consumers are now required to exercise ongoing restraint for a month, sometimes even longer. This can lead to fatigue and eventually capitulation, especially as most South Africans are already exhausted from the events of this year. If necessary, avoid going onto online retail sites during the month and, as a minimum, turn off push notifications from retail outlets and online platforms.
January sales are worth waiting for
While Black Friday may offer some excellent discounts and bargains, keep in mind that the price of goods generally drop even more in January after the festive season has ended. If there is something you are considering buying, it may be worth holding out for the January sales. It will also give you time to think about the purchase and determine if it is something you really need.