Kiwis willing to take on debt to shop Black Friday sales - report

Wednesday, 13 November 2024

A new survey has found Kiwis are gearing up to take on extra debt to buy something during Black Friday sales - a major red flag, experts say.

Findings from local price comparison website PriceMe show 58% of New Zealanders have “drastically” changed their shopping habits as a result of the cost of living crisis - and many are relying on Black Friday sales to be able to afford Christmas gifts this year.

A decline in non-essential purchases and a rise in bargain-hunting behaviours over the last few years, including buying second-hand, has put retailers in a precarious situation.

As financial concerns have grown for consumers, so too has a preference for less frequent, “more intentional” purchasing, PriceMe research found.

The survey of 1150 New Zealanders from around the country shows there was a notable increase in the number of people planning to shop Black Friday sales - 51% said they would this year, compared to 35% last year, with almost double the number of those aged 65 years and above saying they expected to hit the shops during the sales weekend this year.

Many respondents said they had held off on spending in anticipation of Black Friday and Cyber Monday sales, beginning Friday, November 29.

Gavin Male, chief executive of Auckland-based PriceMe - part of NZ Compare - said shoppers could end up paying an inflated price even on discounted items this Black Friday, and urged shoppers to do their research before parting with their money.

He said it was “never worth getting into debt for non-essential purchases”.

“We're still feeling that long tail of the cost of living crisis and so as a nation Kiwis are looking to stretch those budgets further. Whilst there's some relief rolling through now, I think there's also a lot of pent up demand.

“It is definitely worth making a list and sticking to that if you have a shopping wish list ahead of Black Friday, then when it comes along, you're not necessarily as tempted by things that you don't need,” said Male.

“Retailers will be sticking massive discounts in front of you to shift stock and items that are a bit more more frivolous and non-essential, but it can only be a good thing as long as you keep your wits about you.”

Reasons for shopping sales

PriceMe’s data shows 51% of New Zealanders are relying on Black Friday savings to be able to afford Christmas gifts, and 48% to buy or replace a household item.

Women were found to be more willing to participate in Black Friday sales.

Stats NZ’s latest electronic card transactions data shows a 1.1% fall in retail spending in October when compared to the same time last year. This followed a 5.6% fall in September, compared to the same month last year.

On a month-on-month basis, transactions rose marginally and spending increased 0.6% on September.

Retail NZ chief executive Carolyn Young said the small monthly increase followed the normal pattern for spending as retailers moved into the busiest time of the year.

She said the next few weeks would be critical with the upcoming key sales periods including Black Friday and Christmas promotions: “Many retailers rely heavily on strong sales during this period to ensure they have a buffer for quieter months, so we hope that consumers will respond to improving economic conditions with increased confidence.”

Male said he anticipated there would be some good genuine discounts on offer - as retailers needed to make significant sales to make up soft spending through most of the year.

“There is an element of pent up demand from both consumers and retailers. Retailers need to to make some money in this period, or we'll see more struggling and maybe not making it into into next year, and for consumers there will some bargains we had. It'll definitely be good if you're looking for certain items and you know what you want, but make sure you stick to that list and take advantage of guarantees or price matches.”

PriceMe data shows the average Kiwi planned to spend just over $600 this Black Friday, with consumer electronics and clothing expected to entice shoppers the most.

One in four people surveyed said they planned to use Buy Now, Pay Later services to make a purchase during the sales this year, and 28% planned to use a credit card or their overdraft facility.

New Zealand shoppers had always been price-conscious, but had become even more accustomed to spending only when there was a sale or discount, said Drew Franklin, a marketing lecturer at the University of Auckland.

But such consumer behaviour presented risks of predatory sales tactics, such as surge pricing and non-genuine discounts, Franklin said.

Massey University professor Bodo Lang said the Black Friday shopping phenomenon was the product of great marketers. He encouraged shoppers to buy only what they actually needed and could afford.

“Buying anything on borrowed money, apart from a house, is a bad idea.

“People have not been able to spend as freely as they might have liked to, and so the promise of deals, even though they may not be that amazing, and the anticipation, seems to be a big lure for consumers to consider buying things on borrowed money,” Lang said.

“We live very much in the attention economy, there's a lot of commercial signals that are vying for our attention, and that's driving this behaviour, otherwise, advertisers wouldn't be doing it. With that comes an increasing willingness to consume things; to buy things that people don't actually need because it makes them feel good, it gives a short term spike of dopamine, but that dissipates pretty quickly after purchase.

“That makes us much more easy to manipulate as consumers, to tempt us into situations where it's difficult to resist.”

Lang said once lured into a store, it was hard for many to resist making a purchase, and the same was increasingly happening online as retailers such as Temu used gamification to blur the line between gambling and shopping.