5 tactics retailers will use to get you spending this holiday season

While the holiday discounts are often real, retailers and marketers deploy a slew of other time-tested tactics to drive shoppers to spend.
While the holiday discounts are often real, retailers and marketers deploy a slew of other time-tested tactics to drive shoppers to spend. Getty Images

The most wonderful time of the year seems to start earlier and earlier every season. Although many Canadians are loath to put up Christmas lights before Remembrance Day, holiday-themed merchandise has already hit store shelves and ads running festive jingles have been airing since right after Halloween.

The phenomenon has a name — “the Christmas creep” — and a marketing rationale: the sooner you get into the holiday spirit, the more you may be willing to spend.

Money 123: Psychology of saving
Money 123: Psychology of saving

“Big promotions shouldn’t be confined to Black Friday and Cyber Monday,” reads a study from global consultancy McKinsey and Company. Retailers should consider stretching out the pre-Christmas period of special deals, including “preview sales” in November, the report continues.

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“This kind of sustained strategy is a lever for … gaining a meaningful share of consumers’ mind-sets and purchases.”

So get ready for a slew of pre-Black Friday and pre-Cyber Monday deals, as that’s exactly what retailers will call their early and mid-November promotions.

READ MORE: Not just Black Friday and Cyber Monday — the best days to save on gifts this holiday season

That labelling is also a marketing tactic, said Emory Nelms, a senior researcher at Duke University’s Common Cents Lab. Since we’re already familiar with the concept of Black Friday and Cyber Monday, calling a sale a preview of those special days fosters our perception that we’re going to get deals.

And that’s only the beginning. As the holiday shopping extravaganza gets into full swing, retailers will deploy a slew of strategies that rely on our cognitive biases and shortcomings to drive sales. While the discounts may be real, a lot of psychology goes into encouraging you to reach for your wallet.

Here are some of the tactics you might face as you work through your holiday gift list.

Cheat days

That’s what Mariel Beasley, principal at the Common Cents Lab, calls Black Friday and Cyber Monday. People are more likely to splurge on “cheat days” because it feels like an exception, she explained via email.

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“Because it’s on a designated day, there appears to be a less continued spillover and increased spending after that day.”

And while there’s some indication that teaser deals earlier in November are somewhat diluting the “cheat day” effect, the last weekend of the month remains a major driver of consumer spending in North America. Last year, Americans dropped US$60 billion during the four-day Black Friday weekend alone, according to data from Customer Growth Partners, and more than 50 per cent of Canadians said they were planning to shop on Black Friday, according to a survey from McKinsey.

Unexpected costs, emotional spending can push up holiday expenses
Unexpected costs, emotional spending can push up holiday expenses

Making deals look bigger and better

Few things get us as excited as the notion that we are getting a deal, that we snatched up something for an unusually low price. That’s what drives our sense of “extra value,” Nelms said.

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But how good a deal was it, exactly?

The concept is murky, with much latitude for marketers to mould our perceptions, Nelms argues.

“Prices [are] really related to the environment around us.”

Placing a mid-priced television set next to an expensive one with similar features, for example, encourages us to think the cheaper TV is a “deal,” even though we might have thought it was overpriced if we’d seen it on display by itself, Nelms said.

READ MORE: Black Friday — 4 things you probably don’t know about buying from the U.S.

Another way for retailers to hype-up a deal is to tell you that you have to hurry to get in on it. When you’re scrolling through flight fares online, for example, and see “only seven left,” you’re more likely to click.

“When an item is perceived as scarce, it can also drive up demand,” Beasley said.

Purchase limits have a similar effect, she added via email.

“Telling people that there is a limit on the number [of items] they can purchase drives up demand because it provides an anchor, a sense of scarcity, and implies an expectation that everyone will want to get in on this deal.”
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Ditto for messages that inform you that whatever you’re looking at is in 10 other people’s shopping carts right now. That not only reinforces the perception of scarcity but also reassures us that we’re making a good buy because other people seem to think so as well, something Beasley calls “social proof.”

READ MORE: Are Amazon’s Black Friday deals as good as they seem? We checked

Finally, our understanding of what constitutes a “big discount” seems iffy as well. Our brain often focuses more on the percentage reduction rather than the actual amount of money we’re saving, according to Beasley.

“We aren’t as excited about a small discount off of a large-priced item — five per cent off of a $100 item (saving $5) — as we are about a larger discount off of a small-priced item — 50 per cent off of a $10 item (saving $5).”

Buy now, pay later

The next best thing after a discount may be “buy now, pay later.” Chopping up your payments into tiny little installments or offering a payment-free grace period plays on two well-known cognitive biases.

Postponing the moment when money will actually have to come out of our account reduces what behavioural economists call “the pain of paying,” Nelms said. At the same time, the thought of payment to come doesn’t bother us quite as much because we are prone to worrying less about things that happen in the future, something known as “future discounting,” Nelms said.

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READ MORE: 5 tips to avoid bad deals and overspending on Black Friday

Separating consumption from payment, in other words, removes a psychological obstacle to spending.

And while retailers have typically used installment payments for big-ticket items like mattresses and appliances, the practice is becoming increasingly common for cheaper products thanks to new technology that makes it easier for merchants to offer and process a series of smaller payments, Nelms said.

This is how much Canadians across the country are planning on spending during the 2018 holiday season
This is how much Canadians across the country are planning on spending during the 2018 holiday season

‘Win Christmas’

While many of the tactics employed during the holiday season are tried-and-true methods retailers use all year round, some are specific to the holiday season.

The idea of gift-giving is one such powerful psychological lever, according to Nelms. Around Christmas, more than any other time, we are likely to splurge on others.

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“People have a higher willingness to purchase items because of that,” Nelms said. “And retailers very much take advantage of that social norm around the holidays.”

Campaigns around “the best gifts for him and her” and ads telling parents they can “win Christmas this year” are also playing on how buying gifts for others makes us feel about ourselves, he added. And because we want to be the best partner or the best dad, we may end up spending more than we meant.

“It’s a way of signalling to [yourself], that ‘I am a good dad,'” Nelms said. “‘This is who I am. This is the kind of person I want to be.'”