How FOMO drives consumers and retailers to participate in Black Friday

Over the past decade, the Cyber Week sales period, anchored by Black Friday, has become a bigger fixture on the retail calendar. It has brought forward the all-important holiday season, as retailers push for the first-mover advantage, discounting before their competitors in an effort to get an early lead. 

For the past few years, consumers have been more than willing to dip into their bursting savings accounts – thanks in large part to the pandemic – to spend on Black Friday. But this year things are a bit different. 

With interest rates growing again and young people all but pulling back their spending entirely, it’s been more difficult to attract customers to the table. 

In the leadup to Cyber Week, which offers significant discounts ahead of Christmas, the Australian Retailers’ Association was predicting sales would grow 3 per cent this year. However, beyond that, it expects the holiday season to be flat on last year. 

“Despite a lukewarm spending projection for the pre-Christmas period, Black Friday this year is set to be record-breaking, as consumers seek out bargains amid intense financial pressure,” ARA chief executive Paul Zahra said. 

However, the ARA is predicting Australians will spend $67.1 billion during the overall holiday period – just 0.6 per cent up on 2022.

Lecturer in marketing at Swinburne Business School Jessica Pallant told Inside Retail that many consumers would likely be attracted to the discounts on display over Cyber Weekend, but that not everyone should necessarily be spending. 

“It’s kind of interesting. There’s the potential opportunity for customers to get a great bargain, but there’s also the possibility for them to make purchases they wouldn’t have otherwise made,” she said. 

“Because of the psychology of sales and the immediacy of it, there’s that fear of missing out, and many consumers are exposing themselves to making impulse purchases.”

According to data from financial analysis firm Mozo, 41 per cent of Australians said they would buy Black Friday deals on credit, despite more than a third of them already struggling to pay off their credit balance each month.

However, 17 per cent of Mozo’s survey respondents said they were not planning to buy at all over the weekend, as they “can’t afford it”.

Everyone fears missing out

The fear of missing out goes both ways, Pallant said, with many retailers looking to leverage the Cyber Week sales period to improve what has been a pretty average year. 

The deep discounts offered during the Black Friday period, however, don’t tend to lend themselves to healthy balance sheets. 

“Retailers created this situation for themselves,” Pallant said. 

“It’ll be interesting to see what’s going to play out over the next few years. Will we start to see a shift away from heavy discounting, and toward providing value in other ways?”

Not all retailers and brands are onboard with discounting, of course. Australian gumboot brand Merry People reminded customers that it has committed to being a brand that never goes on sale, and, despite the industry pressure, it won’t partake in sale events.

Pallant noted that more brands are moving toward this model not only for sustainable and ethical reasons, but also financial.

“It’s a bold strategy because customers do want a bargain,” she said. 

“However, if you can guarantee the same price all year round, people are less likely to wait for these sales events to buy.”

Fashion first

According to Mozo’s predictions ahead of Black Friday, most purchases were expected to be in the fashion space: a fact that presents a large issue to the already overwhelming issue of fashion wastage.

Supply chain consultancy TMX Transform noted that 55 million pieces of clothing purchased each year end up in landfill without being worn. Sales events like Black Friday, which tempt shoppers with limited-time deals, tend to make the issue worse.

The Australian Fashion Council kicked off its opt-in Seamless clothing stewardship scheme earlier this year in an effort to combat this problem, but hasn’t received industry-wide support. Kmart Group recently said it wouldn’t join the scheme, and would prefer a scheme regulated by the government to ensure brands across the industry are all included.

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