Just 1 in 7 Black Friday deals are genuine discounts

Sascha: [00:00:02] From Equity Mates Media. This is The Dive. I'm your host, Sascha Kelly. Black Friday and Cyber monday. Once just American sales, they've now become truly global.

Audio Clip: [00:00:14] Well, what we're finding now is that Black Friday and Cyber Monday are of equal importance on Boxing Day. 

Sascha: [00:00:19] But before you log on and take advantage of the discounts, I know I'm ready. Here's a stat for you to keep in mind. Only one in seven Black Friday deals offer a genuine discount. That finding came out of the UK from a product review website which echo dot UK. So that got us looking deeper into the world of Black Friday and Cyber Monday. It's Monday, the 28th of November. And today I want to know, are the savings that I'm being pushed on Black Friday and Cyber Monday, all that they're cracked up to be? And are there any rules around advertising, discounts and sales? To dig into this today. I'm joined by my colleague here at Equity Mates. It's Darcy Cordell. Darcy. Welcome to the Dive. 

Darcy: [00:01:02] Thank you Sascha. Nice to be here. 

Sascha: [00:01:04] Excellent. I've got one question for you, and that is, are you a shopaholic? Do you like getting a discount hunting for a sale? 

Darcy: [00:01:11] I'm not a shopaholic, but I've been super interested in Black Friday until researching this episode. And now I'm a little bit more hesitant. 

Sascha: [00:01:20] The scales are falling from your eyes. Well, look, this is a topic of interest to a lot of our community, because it is the topic that you asked us to dig into via and I Instagram at our handle at the dive business news. So we've you to thank for researching this episode. So Darcy, let's get to it. What is right on the heels? Black Friday, Cyber Monday and five weeks to shop til you drop. Let's start with some establishing facts around Black Friday from humble origins in Philadelphia in the 1960s. I don't know whether holiday is the right word, but let's think of it as a global retail holiday. 

Darcy: [00:01:57] That's right. It follows Thanksgiving in the US, Sascha, and that's where it began and it's where it remains the biggest. The average American spends $485 on Black Friday, according to the shopping deals website, Black Friday Global. That's the highest in the world by a fair margin this year on Black Friday, shoppers spent $9.1 billion online. Now that's online only, and that makes up about 50% of total sales. So it's probably pushing around 18 to $20 billion just on Black Friday. But Cyber Monday, that's the biggest of them all. There's expected to be about $11 billion spent online on Cyber Monday. So that's pushing over 20 when you take into account in-person shopping. 

Sascha: [00:02:39] And I know I'm a sucker just on an anecdotal basis, I don't really need anything, but you just see all these flashing images and things that you could have and you just start falling into that rabbit hole. So let's dig closer to home. What do the numbers in Australia say? 

Darcy: [00:02:54] So the Australian Retail Association predicts about $6.2 billion worth of sales from Black Friday through to the end of today, Cyber Monday. So that four day weekend, 25% of Christmas presents will have been bought over the four day sale and it's now the busiest time for retail in Australia, overtaking Boxing Day in terms of volume of sales this year. 

Audio Clip: [00:03:15] Black Friday and Cyber Monday are expected to be bigger than Boxing Day, with shoppers tipped to spend as much as $5 billion on the sale. 

Darcy: [00:03:23] Another step for you between Black Friday and Christmas Day last year, Australia Post delivered 52 million parcels to Australians. 

Sascha: [00:03:31] Well, I'm waiting for one today. I just got a notification saying my adored beauty package is on the way. Pretty excited, hoping it doesn't arrive during the record. Have you got any other notable stats for me? Darcy Any fun ones that you just want to get in there?

Darcy: [00:03:46] I want to mention Canada. They're right up there in terms of spending about $430 per person and the UK comes in at third. They spend around $400 per person on these sales. £8.7 billion are expected to be spent in the UK over the four days this year. And it's pretty remarkable saying that we're living through a time of really high inflation, that this spending is still breaking records. 

Sascha: [00:04:08] Yeah, the atmosphere certainly from where we're sitting and the newspapers we're reading seems to be that we're all preparing for a bit of a tough time. And yet these numbers are staggering. I think there's always going to be some cynicism about Black Friday and Cyber Monday. It's not like retailers are going to be offering massive discounts on all of their most popular products just a month out from Christmas and the biggest gift giving season of the year. This is the prime time for us to be opening our wallets and buying stuff for the 25th of December. But the extent of how much retailers were pulling the wool over our eyes was really illuminated by this study that I talked about, by which decode the UK. 

Darcy: [00:04:54] It's a pretty stunning headline, isn't it? Just one in seven Black Friday deals offer real discounts with most. Products were cheaper six months before. 

Sascha: [00:05:01] I know. It just goes to show how simple we all are. Darcy We just fall for the colour and movement. 

Darcy: [00:05:06] Yeah. So let's look into this study a bit further. Sascha, which looked at 214 Black Friday deals from last year across seven major UK home and tech retailers. It included Amazon, IO, Argos, Currys, John Lewis, Richardsons and very. And for these 214 products, they looked at their prices every single day in the six months before and the six months after Black Friday. It found 83% were cheaper or the same price in the six months before the Black Friday sales. And it found 98% were cheaper or the same price at some other time in the 12 months looked at. So none of the products were cheaper on Black Friday alone.

Sascha: [00:05:46] That's the real kicker for me. None of the products were cheaper on Black Friday alone. But let's look at the specifics. Can you give me examples of this?

Darcy: [00:05:55] One example which was highlighted was as the nosey chimney cooker hood at John Lewis, and it was advertised at £239 on Black Friday. And it said that it was a £30 saving, but its price had only been moved to £269 on the 13th of October. So this £30 discount had been applied since the 9th of November. It was £269 for less than a month. Another example is a Toshiba TV sold for £279 on Black Friday with an advertised £100 saving not bad, but which found it had only been moved to £379 for just three days in the month before Black Friday.

Sascha: [00:06:35] Just three days? 

Darcy: [00:06:37] Yeah. And it wasn't exactly a Black Friday deal. Very. Then check the TV at that £279 price until the 22nd of December. And then they dropped the price further to £275.

Sascha: [00:06:49] And which called out a couple of retailers in particular for being the worst offenders, didn't they? 

Darcy: [00:06:55] They did. So Amazon and Varys were rated the worst retailers overall for dubious discounts. 

Sascha: [00:07:02] So I guess the question becomes and I feel like I already know the answer here, Darcy. But is this just a problem in the UK or are we all being duped by Black Friday discounts? 

Darcy: [00:07:14] It's a worldwide challenge. New Zealand watchdog Consumer NZ has been pretty vocal about Black Friday duping. One example is they called out Farmers, which is a New Zealand retailer and they were advertising a Kenwood bench top for $520, down from the recommended retail price of $730. But Consumer NZ said farmers sell it at that $520 more often than the recommended price of $730. And in the US recently the Wall Street Journal tracked an 8% rise in prices for about a fifth of the 1800 or so products they tracked just before Black Friday.

Sascha: [00:07:50] It really goes to show it's all about the way retailers make us perceive these deals. It makes me think of the analogy of the frog in boiling water. If you're not noticing that the price point creeps up, then when they discount it, it's easy to get taken away by those large for sale signs. After all, they seem like incredible offers, but a lot of the time they've just been brought back to the original sale price. 

Darcy: [00:08:15] And as Black Friday and Cyber Monday continue to grow around the world, I expect there to be a lot more attempts at this duping, but also hopefully more concerted effort by watchdogs and governments, I guess, to investigate how genuine some of the deals really are. 

Sascha: [00:08:29] I think you've hit the nail on the head there, Darcy. Let's take a break and then I want to dig into the rules around this advertising. Welcome back to The Dive. I'm your host, Sascha Kelly. Now we're talking about Black Friday and Cyber Monday deals. Look here at the dive. We don't want any presents for the silly season, but you can get us something for free. And that's a five star review on whatever podcast player you listen to. Give us a five star review, tell us how much you love us, and that helps us get to many more years. But let's get into the topic at hand. DORSEY Just one in seven Black Friday deals are the real deal nuts according to which Echo dot UK. But what we found unsurprisingly is this isn't just a UK trend. This is a strategy used with retailers across the world. So here comes the headline question: Is this even legal? 

Darcy: [00:09:25] There are rules around it, but retailers can raise their prices before Black Friday and then slash them back to the previous price. As long as they raise prices for what's called a reasonable period of time. 

Sascha: [00:09:36] Reasonable period of time. That seems to be where. How long is a piece of string? Could be the follow up question. 

Darcy: [00:09:44] It's a little vague, but laws differ around the world as a general principle. But the law says you can do this. What they called it, is pricing. If a consumer would have actually paid the war price to purchase that item for a reasonable period before the sale commenced. 

Sascha: [00:09:59] Okay. As I said, the vaguest wording I've had in some time, I am going to push this point. Is there actually a time frame on this. 

Darcy: [00:10:08] Rule in Europe? There is. They state how long the reasonable period is. A new protection law that passed this year says businesses must maintain the product's price for at least 30 days, so 30 days before adjusting the price for a sales campaign. But in most other parts of the world, they leave it up to the courts to decide what this reasonable period is. 

Sascha: [00:10:29] Okay, interesting. Do you have some examples? 

Audio Clip: [00:10:32] It only happens once a year. JCPenney's Black Friday sale? 

Darcy: [00:10:35] Yeah. In the U.S., JCPenney. They paid a $50 million settlement for advertising blouses, referencing a higher price than had been used in the previous three months. In Australia, there's not a strict time limit, but the courts look at what was reasonable in the circumstances and an example is jewellers themselves. They were fined $250,000 for misleading pricing when they had sold barely any jewellery at the war price in the four months before they were charged. And also in New Zealand luggage retailer store handbag was fined $780,000 in the Auckland District Court just last week for running two saving promotions between 2018 and 2020.

Sascha: [00:11:16] So I guess the line there is that retailers can do it, but then they might have to pay these massive fines if they're kind of skirting too close to the grey area of was is my natural follow up question then, Darcy is how should we as consumers be navigating this terrain? 

Darcy: [00:11:34] We've got to be honest, Sascha, the deals advertised are pretty tempting. I can't lie. I've been scanning online stores for presents over the weekend, but in terms of getting the best deal for yourself, there are a couple of things you can do. Firstly, check the price of the product across multiple websites. If it's a new Dyson vacuum you're after, say if it's listed for a different price across multiple retailers, and then you can spot if some of the deals look dodgy or genuine, you can also check the price history. And there are some websites and apps that let you see the price history of certain products. Most of them are American, but price runa and Price Spy are two examples. So just lets you say how much the price of changed coming up today's sales and then it's really important to be sceptical and read all the details that you can deals that say was 100 now 50 those was is deals for example can be a little dodgy there was price may have just moved up recently and some signs have more detail on and others so make sure you check the fine print where possible. 

Sascha: [00:12:34] See those are three really good tips. I have to admit I bought new makeup last Friday in the Black Friday deals. Didn't even check, knew that the foundation I wanted was kind of expensive. It said about 20 boxes were taken off the price. I went, That's good enough for me. Didn't do any of those things, so joke's on me, obviously.

Darcy: [00:12:53] Well, yeah. This is Everton. It's going to be good for you. 

Sascha: [00:12:56] Yeah, absolutely. 

Darcy: [00:12:57] I think the last point to remember, and I don't want to be Debbie Downer here, but a good shopping memo to have is if you are going to buy it anyway and it's half price, then you've save 50%. Right. But if you weren't going to buy what you're after, but you do because it's half price, you've actually wasted 100%. 

Sascha: [00:13:15] Is that the motto that you live by, Darcy? 

Darcy: [00:13:18] I'm trying to buy something straight out of this. 

Sascha: [00:13:23] See, the truth comes out. Look, I always personally subscribe to the price per wear analogy. So if it is slightly expensive, but I think I'm going to wear it every day and it's coming down below that dollar per wear or dollar per use. Then I always see it as. A worthwhile investment. That's how I justify my shopping habits. 

Darcy: [00:13:42] Sounds like a reasonable strategy for us. 

Sascha: [00:13:45] Well, if you've enjoyed this episode, if you are similarly shocked by the fact that one in seven Black Friday deals are legit, then please tell a friend about it. Maybe send it to your shopaholic mate. It really is just the best way for our podcast to grow and we are always welcoming more listeners. So if you've just joined us for the first time, then welcome. Go check out our back catalogue. Remember, you can follow us on Instagram at the dive. Business news. That's where you can get involved in the polls and have some control over what we cover every week. You can get in contact with us by email thedive@equitymates.com And you can subscribe wherever you're listening right now and then you'll never miss an episode. Darcy, thanks so much for joining me today. Although I am a bit grumpy that you've made me feel guilty about shopping. It was still great fun unpacking this subject with you. 

Darcy: [00:14:34] It was Sascha. Thank you. 

Sascha: [00:14:35] Until next time.