The retail market is an interesting thing as so much of it weighs on supply and demand – just like it does with investing.
However, when demand to shop is waning, the retailers will apply their own type of 'monetary policy' (actions deployed by nations to increase their money supply) in a bid to get things moving again. And in their case, this is sales.
What are the Black Friday and Cyber Monday sales?
The Black Friday sales are a US phenomenon that’s been around since the 1950s, although it only came to the UK in 2013 when Asda – being owned by Walmart – introduced it.
Now though, you’ll see many big retailers promoting sales, discounts, and offers to tempt you into a pre-Christmas purchase.
Historically, most people would do their shopping in physical brick and mortar stores, but that trend is changing as over 80% of Brits now buy things online.[1] This is a stark contrast to 2005 as online sales only accounted for 3% of all retail sales.[2]
And this was the year that Cyber Monday was introduced.
The aim was for retailers to encourage more online shopping by providing exclusive discounts that could only be found online. Many years later, and Cyber Monday is almost as big as Black Friday sales, with a wide range of stores taking part to offer their customers exciting deals.
Are Black Friday sales worth it?
Typically, Black Friday sales are aimed at big-ticket items – TVs, fridges, dishwashers – but they also include things like smartphones and laptops.
While the discounting on these may appear good on the face of it, not every deal is a great deal, and there may even be misleading deals that don’t actually save you any money. Black Friday is also used by companies to sell off previous models of their products, just before bringing out new ones.
Confused? You’re not alone. It’s a tactic that many retailers employ to try and make you believe that the ‘sale’ item you’re getting is the very best price.
The consumer guidelines for retailers putting on a sale is that their product should be offered at a discount for less than or the same amount of time that it’s sold at full price. So, if you have a TV that’s usually £1,000 but reduced to £800, it should be sold at £1,000 for longer than £800. It makes sense – that’s basically how a sale works. But this doesn’t say anything about how often or how long the TV needs to be sold at £1,000.
In 2022, Consumer champions, Which?, actually carried out an investigation into whether Black Friday deals are real. To figure this out, they analysed 214 of the Black Friday deals offered by seven major home and tech retailers in the previous year, looking at their prices every day in the six months before and after the day (which was 26th November 2021).
What were their findings? Well, 86% of the items they tracked had been the same price or cheaper in the six months before Black Friday, and none of them were at their cheapest on that actual day.[3]
Some retailers may even increase their prices months before only to lower them for Black Friday, so it’s important to be careful with the different sales you see and in some cases, you may want to look out for discount codes.
But are Cyber Monday deals any better?
As you don’t have to visit a store for Cyber Monday, you do have the benefit of being able to quickly price-check against like for like items at as many businesses as you want. However, the sort of deals you find could be different from those on display at Black Friday.
Historically, Cyber Monday is often run by smaller retailers and is normally focused on clothing, smaller appliances, toys, and shoes. Essentially, they’re smaller items that are cheaper to ship, which means that the company can offer discounts such as ‘free shipping’ without needing to drop their prices – others may do the opposite by dropping their prices but increasing their free shipping limits.
Is there a difference between Black Friday and Cyber Monday?
When it comes to the discounts and products on offer, there’s very little that differentiates these two sales.
We mentioned earlier that the types of products tend to be different, but you may have noticed that these two events are getting more and more similar, with many stores now promoting their Black Friday sales online through until Monday – and they seem to be starting earlier and earlier every year too.
This has also made some retailers, such as John Lewis and Amazon, trend towards having identical discounts on both days of these sales, and an increasing number of companies are holding their November sales from Black Friday through to Monday, or are starting them as soon as November rolls round.
This tactic of extending the availability could help retailers to mellow out the spikes in their demand while also reducing the costs associated with a fast turnaround post-sales.
Being financially smart during the Black Friday Sales
Sales can be a great thing, but they can also lead to unnecessary and impulsive purchases. If you want to try and take advantages of the sales while staying smart with your money, here are some things that you could try:
- Check the price – if you’ve ever shopped online, you’ve probably seen the amount of money you could save just by doing a quick price check with other stores. Well, Black Friday and Cyber Monday sales are no different – compare different offers, other stores, and even if you could gain additional vouchers. For example, if an item is the same price at two stores, but the one offers loyalty points then that could be the clincher.
- Take a look at the price history – you may think that checking prices is complicated, but it’s easier than you might think! For example, websites like pricerunner.com or pricespy.co.uk do all the hard work for you – tracking prices across a range of websites to let you know whether you’re overpaying for an item or not.
- Have a plan – it’s normally a good idea to go into sales knowing what you want (for example, you may need a new toaster). This way, you’re focused on just finding one great deal rather than being distracted by all the shiny offers they have available. If you know beforehand what it is that you’re looking for, you could set a budget for what you want to pay for it.
- Only buy what you need – similar to the above, but instead of settling on a plan, you stick to your plan of action. Using the example above, you may want a new toaster, but don’t be tempted into an offer that sees you spending more money to throw in a kettle and a microwave you don’t need. Although it could be a saving on the recommended retail price, it’ll likely cost you more than simply buying the toaster.
- Check what you’re buying – often retailers will use Black Friday and Cyber Monday to pitch products from brands that you may never have heard of. While these may look like great deals on the face of things – like paying peanuts for a brand-new TV, for example – they may not have the longevity or quality that you really wanted.
Sticking to your financial goals
For many people, Black Friday, Cyber Monday, and even the whole festive season can seem like one big expense. This can be daunting to many people – especially if you’ve got a slim budget that you’re trying to stretch, and often these sales could be an opportunity to do that.
Of course, a successful budget is one that allows for some flexibility and provides you with a bit of money to spend as you wish. But even so, sticking to your long-term financial goals may not sound quite as enjoyable as frivolous spending.
If you’re in a strange limbo between planning your long-term finances and trying to navigate the tricky world of retail sales, then you might be interested in some of our investment tips for beginners. It may not help you find the best deals during the November sales, but it could help you take the first step towards a stronger financial future.
References:
1: https://www.statista.com/forecasts/891311/digital-buyer-penetration-in-the-united-kingdom
2: https://www.statista.com/statistics/283188/online-share-of-retail-sales-in-the-united-kingdom-uk
Please remember the value of your investments can go down as well as up, and you could get back less than invested.
Wealthify does not provide advice. If you’re not sure whether investing is right for you, please speak to a financial adviser.
