Shopping psychology: how sales events mess with your mind

Australians can enjoy a wealthier Christmas if they shop wisely at sales, but are being warned to control their “panic monster”.

Use the sales to bag a bargain but be organised about your buying.

Consumers are embracing Australia’s relatively new November sales bonanza, but often ignore shopping’s psychological traps that can be costly.

As the Black Friday and Cyber Monday four-day shopping weekend winds up, money experts say using sales events to do the bulk of your shopping can deliver big benefits.

However, you’ll need to have a plan and a list and stick to them.

Behavioural economist and author Phil Slade says the Black Friday and Cyber Monday sales are an “incredibly lucrative marketing tool” and have exploded in popularity among retailers because they work.

“Black Friday can be the event that triggers people’s panic monster to come out and shop now,” Slade says.

But given it’s still four weeks until Christmas, many shoppers will go back to the shops and buy something else as their November purchases fade into memory, he says.

“On the positive side, it’s improving your cash flow, but the negative side is in total you are spending more.

Behavioural economist Phil Slade, author of Going Ape S#!t?, says know your panic monster.

“Set yourself a budget and stick within those limits. As long as you have those spending limits, knock yourself out and go to heaps of sales.”

But always be aware of your own “panic monster”, Slade says.

“We put off important things until they become urgent,” he says.

“The problem with the panic monster when purchasing is that the purchase of the item is more important than thinking about costs – if you’re in panic mode you are much more likely to spend more.”

Money coach Karen Eley says people’s adrenaline and dopamine hormones become heightened in times of sales amid anticipation of a bargain.

“They can override our rational financial decision-making abilities,” she says.

“Using sales seasons can be financially advantageous, especially when it’s for a bigger ticket item like a TV, fridge or furniture, as the savings can be significant.

Money coach Karen Eley says goal setting is important. Picture: Heidi Wolff

“Forward planning and setting your budget is key to this strategy to ensure you don’t fall in the trap of spending more than you should in the moment.”

Eley says people should:

• Set short, medium and long-term financial goals to serves as rational check-ins.

• Have an annual budget for indulgent buying “and once you’ve used it, it’s gone”.

• Consider your emotions before purchasing, as excitement can impair money decisions.

Consumer psychologist Dr Adrian Camilleri from the University of Technology Sydney says sales events present “a very hyped and emotional environment” that can lead to impulse spending, an escape from usual experiences, poor judgment and unsafe shopping.

“It’s important to not get carried away when shopping the sales to ensure we maintain control over our spending, making safe purchases,” he says.

“The fear of missing out on fleeting deals can leave you in a frenzied buying mode, which more often than not results in spending more than you planned. In some unfortunate instances, it could even heighten your chances of falling victim to fraud.”

New research by Mastercard has found consumers have saved an average $5026 each during the pandemic as many curbed their usual spending patterns and behaviours.