3 reasons we keep falling for Black Friday
It seems official: Black Friday has invaded Costa Rican culture, and it’s here to stay. Walking through downtown San José, I stumbled upon one of those stores where the products seem to be perpetually on sale because everything in the store costs less than $10. Even so, from outside you could read a big sign announcing the huge discounts of the Black “Fryday” to come. Yes. Spelled like that. As I doubt they were actually going to fry anything this coming Nov. 27, I immediately realized two things: First, you don’t need to know what it is or even the proper spelling of it to profit from the shopping holiday, and second, Black Friday is not going anywhere.
You see it at Multiplaza, at this downtown budget store and, funnily enough, even at the butcher’s shop three blocks down, where pork chops are on sale during the entire “Black Week.” But why is it Black? Why are there discounts and promotions that day? Although you could read a couple of explanations online, I bet you most Ticos, either consumers or storeowners, have not stopped to wonder. But this is what’s so cool about it. It’s an arbitrary day where everybody agreed that there would be huge savings and huge crowds of shoppers. The day doesn’t even matter, as they showed us in China with their Singles Day.
The process of adopting Black Friday probably went down something like this: Some retailers started noticing what was going on in the United States and said, “Let’s mark down a couple of items and see what happens.” That attracted some shoppers and other stores followed. Then at some point so many retailers were doing it that consumers started waiting to make their purchases on Black Friday because they knew they could get a better deal. The increased demand and sales justified the discounts, and shops started offering more aggressive markdowns, fueling the shopping craze in a mutually reinforcing loop.
Why do we start spending earlier, get stuck in crowded malls and collapse the country’s customs with goodies from online purchases? This whole shopping craze feeds of three very human, mental traps we all fall prey to:
1. Scarcity Principle: Have you ever been to the store and found out the jeans you liked are the last pair? What feeling do you get from finding that out? Does it make you want them even more? Or how about that time when tickets for that concert you wanted to go to were sold out, but at the last minute, the band decided to do one more show? Do you wait and see how they sell, or do you jump online and buy them right away? If you’ve rushed to buy in any of these cases, you are certifiably human. We seem to be wired to crave that which is scarce, which is why we assign more value to those things that are hard to get. Marketers know this, and they play this card to get you to act on purchases which under regular circumstances you probably would wait on, or not make at all.
2. Closing Doors Principle: This is what auctions live by. This is the logic behind that “limited time offer” or that infomercial you see on late night TV where you must call within the next 30 minutes to get the offer. In this principle, what’s scarce is time – and you are running out of it, fast. It seems that we humans are more driven by avoiding losing something than by winning something else. The effect has been documented in many studies, and it basically shows that we can act against our good judgment or even our self-interest when we are placed in a situation where we feel we might lose an opportunity forever. Do you balance two or three hobbies, two or three dating partners, two or three jobs or two or three extra school activities for your kids just not to close off the wonderful opportunities that might stem out of each? Well, there you have it. We might be more efficient of perhaps even happier if we just let the other doors shut, but somehow we find it hard.
3. Social Proof: If enough people are doing it, it must be the right thing to do. That’s the logic behind this principle. In most cases helpful, this mental shortcut helps us rely on group smarts to make individual decisions. The catch is that if you think about it, everybody is watching everybody else, searching for cues on how to act. This can lead us astray, especially in uncertain situations. This is why you run when you see a crowd running, why you look up if enough people around you are, and why this 1950s experiment is still relevant.
If you think about it, Black Friday’s success in seducing us to take out our wallets and make (sometimes poor) purchasing decisions can be attributed in large part to these three behavioral quirks. You know the goods are going to be scarce, because everybody seems to be after them. It’s literally for that day only so if you don’t act fast, that golden opportunity will be gone for the rest of the year. And finally, all those people making the line outside of the stores can’t be wrong. There must be something there worth chasing.
I know that learning about what drives our behavior and the forces behind our impulses to dive into the shopping spree this coming Black Friday won’t make you necessarily avoid the crowds or restrain from jumping on the fading deals in Amazon. But now at least you can stop and wonder if this is really what you want. If it is, you can drop by that little store in downtown San José, check out the “Fryday” and get some pork chops at a killer price. Limited time only!
Read more “Doing Business columns” here.
Randall Trejos works as a business developer, helping startups and medium-sized companies grow. He’s the co-director of the Founder Institute in Costa Rica and a strategy consultant at Grupo Impulso. You can follow his blog La Catapulta or contact him through LinkedIn. Stay tuned for the next edition of “Doing Business,” published twice-monthly.
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