Bad decision-making and bad products this year may have created a $40 million per hour mistake.
Black Friday. Each year it’s billed as the once-in-a-lifetime (well, once-in-a-year, at least) chance to snag an unbelievable bargain. Products discounted to prices not seen in years, with retailers on their knees. The perfect setting for us savvy consumers to pounce.
There are two hefty flaws to this argument for consumer utopia (or ‘consutopia’ — new word?)
First, it’s very likely we make worse than normal decisions on Black Friday.
Ordinarily when it comes to big ticket items (like a TV or washing machine) it’s likely we are reflective in our decision making style and consider various attributes of a product before buying: color, brand, features, warranty, availability and of course price all make the attribute list. Not surprisingly, this is often called an attribute-based choice model. Sometimes these attributes are compensatory (e.g. ‘no store has it near my house, but at that price, I’ll drive 100 km’), and sometimes they are non-compensatory (e.g. ‘even at $50, I’m not going to buy a brand I’ve never heard of’). An attribute-based choice model is complex and fluid, but we typically use this model to make important purchase decisions, and use it effectively to make decisions that are good enough for us, most of the time.
But Black Friday primes us to do something very different. Black Friday pushes toward us impulsive or ‘hot’ decision-making. Decision-making that is rushed and, in many respects, superficial. This is sometimes termed an attitude-based choice model i.e. what’s my overall attitude toward the product? In this context, the wider list of normally valid attributes can go clean out of the window. Instead we typically fixate on just one or two features at most — for example, price (‘ooh, it’s low’) or availability (‘aaagh — there’s only one left’). The ‘ooh’ and ‘aaagh’ are very relevant here — it’s a decision-making style that is driven heavily by emotion (or, more strictly, affect), which acts as an overriding heuristic in shaping our decision. Black Friday is a highly effective demonstration of marketing science being used to get us, as consumers, to switch decision-making styles.
With a hot decision making style, there are clearly casualties (not including you as a buyer getting pummeled in the rush to grab — see above); casualties in terms of what should be influential attributes being metaphorically abandoned in the literal stampede for the deal.
One of those attributes that really should not be thrown out, is the energy efficiency of the thing we’re thinking about buying. It’s obvious — anything with a plug on the end has a running cost as well as purchase price, but on Black Friday it’s far more likely we’re going to forego thinking about the running costs in the future, as we fixate on getting the deal in front of us. With Black Friday, it’s all about the ‘now’.
Ordinarily, this would be a terrible mistake to make as a consumer, especially when we can get not just rough ideas of how efficient (and cost-saving) appliances can be, but laser-accurate and daily-updated comparisons between products, as well as personalized lifetime costs and savings between products. We no longer need to throw money away — our money away — through not understanding the efficiency of what it is we’re about to buy. This fact alone should be enough to make the Black Friday experience one we should skip. We should know ourselves better.
But here’s the second flaw in the argument that Black Friday is a good day for us as consumers. When it comes to energy efficiency as an important attribute (to our wallets, our families and the environment), it’s not that we’re just making a bad choice on Black Friday. We’re making a bad choice from a particularly bad selection of products. It’s a well-trodden retailing trick to push out older and discontinued stock for Black Friday — and often with a quick model number change just for the sale.
Does this matter? Of course. Older and discontinued stock likely means older, redundant technology. And this means…higher energy consumption.
So as well as making poor choices, we’re making poor choices from poor options.
For those that follow this sort of thing, it’s the dark application of decision-making science and choice editing. We’re potentially being primed to look past energy efficiency credentials on exactly the models that, were we aware of them, we’d run a mile from. It’s bad. On stilts.
So how big a mistake might we be making?
There are some key statistics from 2016’s Black Friday that reveal the scale of the issue.
A leading US retailer issued a press release, stating they were selling 3200 TVs per minute during the first hour of trading on Black Friday. Yes that’s right, 3200 per minute. Let’s assume all of those TVs were of a typical size (50"), and of average market energy efficiency. Now if all of those TVs sold had been the most efficient in their class, rather than of average efficiency (but same screen size and performance in all other ways), then Black Friday shoppers could have banked $19 million over the lifetime of those TVs.
Put another way, that’s $19 million taken straight out of consumers’ pockets through a ‘hot’ decision being made as a result of Black Friday — in just one hour, with just one product, from one retailer. Buyer’s remorse, anyone?
But it may be worse still.
We can argue that many of those TVs may well have been sub-average in terms of efficiency (through using older, less efficient components). If that’s the case, then that consumer loss can easily climb towards $40 million, when we compare what we could have bought, with those TVs at the other end of the energy efficiency scale. $40 million, in just one hour, with one product and from one retailer.
Now think about scaling that number up to all electrical product categories, from all retailers, and for the whole of Black Friday.
To be clear, we’re not saying that particular retailer practised marketing old stock, and it’s not likely everyone made the same atrocious decision. But even if we take a broad mix of the most efficient and a mix of the least efficient TVs on sale on Black Friday, and estimate people bought within that lower mix, we can still see a consumer give-away of $15 million in that first hour.
And remember, that’s not a give-away TO consumers — that’s us as consumers throwing that money away in terms of burning unnecessary energy. Actually, we’re not just throwing it away — we’re using it, in effect, to finance increased emissions in the future, which in turn carry huge social costs to us and the environment. This means the number goes up dramatically yet again.
But at this point, I reckon you — like me — have heard enough. Let’s just agree it’s a plain stupid way to buy, and ironic considering it happens on the very day we’re supposed to be savvy consumers.
Far better would be to ensure we make the decision in the right way, and that we make that decision with an appropriate selection of products in front of us. Both of these are made easy with Enervee’s Marketplace. In partnership with utilities across the US (and Europe), Marketplace analyses the energy efficiency and prices of products and appliances on a daily basis, assigning a unique Enervee Score to every product to signal it’s relative efficiency.
We do this, to make energy efficiency as straightforward and accurate a product attribute as we can, and one we should never ignore.
So to all those shoppers who used Marketplace to grab a genuine bargain in terms of lifetime running costs (not to mention great rebates from your utility, and the comfort of knowing you’re buying from manufacturers that are cutting-edge in terms of their commitment to innovation), we congratulate and salute you. You are indeed savvy consumers.
And to all those who see Black Friday as a once-in-a-lifetime opportunity, can we maybe agree to agree with the marketers? It is indeed a once-in-a-lifetime opportunity. So let’s not do it again.
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