Need to know
- Businesses use every tool at their disposal to encourage you to spend more than you intend, particularly during a sales period
- Data-driven personalised offers and gamification are some of the tech-savvy ways retailers are hoping to influence our spending
- Doing your research, scrutinising your own shopping habits are just some things you can do to avoid making unnecessary and expensive purchases at sale time
Prime Day is very much up and running and, with huge deals dropping constantly, it's easy to get caught up in the hype.
But do you actually need that expensive new television? Should you actually buy a whole host of tech devices because they're cheaper that usual? And how do you resist the sophisticated tactics used to encourage us to spend spend spend?
We spoke to the experts to learn how you're being targeted and what you can do to keep your spending in check.
'Scarcity cues' can entice you to spend more than planned.
Tactics to make you spend
We've all seen the classic 'buy one, get one free' promotion that retailers trot out regularly. These tried and tested offers are so persistent because they work.
Dr Adrian Camilleri is an associate professor of marketing at the University of Technology Sydney Business School. He says these sorts of price promotions are a common tactic.
"They can entice consumers to buy more than they planned to take advantage of perceived savings," he explains.
The creation of a false sense of scarcity is another strategy that's been around forever. How many times have you seen advertisements that urge you to take advantage of an offer by loudly proclaiming, "Hurry while stocks last!"? While you'll certainly still see this kind of signage instore, the growing sophistication of digital marketing adds a new twist to these familiar pleas to part with your cash.
Retailers may be able to use the data they have on you to figure out which inducements are likely to prompt a purchase
CHOICE consumer data advocate Kate Bower
"You'll notice a definite spike in email marketing that contains these sorts of suggestions, known as scarcity cues, as sales periods approach," says CHOICE consumer data advocate Kate Bower. "These communications become more frequent and more urgent and, depending on how much you've shopped with them before, retailers may be able to use the data they have on you to figure out which inducements are likely to prompt a purchase," she says.
You won't just see these offers in email. As sales periods ramp up you'll also find targeted advertising increase in frequency on social media and other online platforms.
Data-driven offers
Retail sales are big business. In 2023, total retail turnover in Australia was worth around $425 billion, an increase of over $14 billion from the previous year. With those sorts of figures at stake, is it any wonder that businesses invest in technology that helps them get a larger chunk of that pie?
A lot of that investment is about understanding who you are and what will encourage you to spend.
"Technology allows businesses to better track individual purchase behaviour," says Dr Camilleri. This is especially true if you're a member of a loyalty scheme. "Extensive information about individual purchase behaviour allows businesses to more precisely target individuals with tempting offers."
Kate Bower agrees. "Loyalty programs and online accounts allow retailers to develop personalised offers," she says. "Consumer data, particularly when gathered from loyalty programs, can be used to entice shoppers to make purchases both online and instore."
Apps like Temu use gaming-like elements to hook customers.
Gaming your spending
Gamification – the practice of applying gaming elements in traditionally non-game settings – is another way retailers use technology to entice us.
For example, the app for online retailer Temu features spinning wheels and mystery purple envelopes that appear periodically, allowing users to win coupons and discounts. These gamification elements increase consumer engagement, says Dr Camilleri.
"More engagement means consumers log in more often, spend more time on the app, see more products and end up buying more than they would have otherwise," he says.
All of this tech (and more) adds up to better, more targeted offers that are harder than ever to resist.
Resisting the urge to spend
Despite all the tools retailers use to encourage you to take part in a sale there are ways you can avoid giving in to temptation.
1. Set a budget
Hitting the shops at sale time when marketing activity and the urgency to spend are peaking can result in overspending.
To avoid post-sales regrets, set a budget before you go to the shop or start browsing online, so you know how much you can afford to spend.
2. Make a list
It doesn't only work when you're shopping for your weekly groceries. Having a list of what you intend to buy can help you avoid unnecessary impulse purchases.
3. Bide your time
For any non-essential purchases, wait for a certain length of time – for example, a week – to allow the original excitement to wear off. "Often you'll find you've already forgotten about the potential purchase," says Dr Camilleri.
Tracking tech can be used to develop target offers, just for you.
4. Know the market
Research prices across various retailers to understand what a 'good' price might look like. Just because something is 'on sale' at a specific shop or online doesn't mean it's good value or the best price out there.
5. Ask yourself if you really need it
Set a threshold – for example, $100 – and commit to providing a short 'business case' to a trusted friend or family member explaining why you really need that new thing if you want to spend more than that amount on a non-essential purchase. "Often, you'll find that the act of trying to explain your reasons in a coherent sentence reveals how flimsy those reasons are," suggests Dr Camilleri.
6. Avoid buy now, pay later (BNPL) services
Whether it's Afterpay, Klarna, Zip Co or another buy now, pay later service that allows you to spread the cost of your purchase across a weekly, monthly or fortnightly payment schedule, our recommendation is to avoid it. These payment methods are often promoted to you at the point of purchase when buying something online or instore as an attractive way to afford a product.
38% of users spent more than they planned because BNPL was available
We've written about the dangers of these unregulated credit products for many years, including the fact that the high fees they charge leave many people struggling to afford repayments. Some studies have found that 38% of users spent more than they planned because BNPL was available.
At sale time, when pressure to spend is high, BNPL can be particularly risky. Consider putting it to the 'buy it twice' test, that says if you can't afford to comfortably buy a product outright twice over, you probably can't afford to buy it at all.
Simply unsubscribing from sites and notifications is one way to avoid temptation.
7. Eliminate temptation
We all know that sometimes the easiest way to avoid the desire to spend is to simply not be aware of the sales or promotions at all. Unsubscribing from marketing emails and text messages is one way you can help avoid the impulse to buy things you don't need.
8. Keep track
Recording your purchases can give you a clear picture of exactly how much you're spending. Banking apps can be a useful tool but old-school manual entries in a notebook or diary can be just as effective.
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With no self-interest behind our advice, you don't just buy smarter, you get the answers that you need.
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Stock images: Getty, unless otherwise stated.
