The onslaught of Black Friday ads may have many people reaching for their wallets, but experts are warning against unnecessary optional purchases this year amid inflation and the skyrocketing cost of living.
But controlling expenses is easier said than done. Bruce Winder, a retail analyst with more than two decades of experience, recommends that consumers approach the pre-Christmas mega sale season with two strategies in mind: preparation and research.
“Most people see Black Friday as the kickoff to the holiday spending season, and it’s true that it can be a great way to save money with some of these great deals,” he observed.
“But it’s also important to know that not all deals are good ones. »
Many retailers prepare for sales months in advance by ramping up manufacturing of select items so they can be sold at heavily discounted prices, or by reducing excess inventory. However, retailers’ main source of Black Friday revenue rarely comes from their lowest-priced items, Winder pointed out.
“Where they tend to make a lot of their money is on the nondescript items that you pass by when you’re drawn to a store or website by its other, more intense offerings,” he said. explain.
“So you might find yourself buying items at 20% or 30% off – since you’re in-store or online anyway – giving you the Black Friday feel without the aggressive savings. »
The importance of planning
Consumers may therefore be encouraged to buy more than they planned, or more than necessary, and this is where planning your purchases before leaving for Black Friday is particularly important, said Kelly Ho, a financial planner. licensed in Vancouver.
“Black Friday can be a great opportunity to save on things we need, but when it comes to cash flow, that’s really how it should be defined: as a need, or even as a discretionary expense that we can really afford,” underlined Mr.me Ho.
As for making room for optional expenses, Mme Ho recommended Canadians start by setting concrete financial goals based on what they want the next few years of their life to look like.
“As a professional, I’m not here to tell you don’t buy this or don’t buy that – what matters to me is the bottom line,” she explained. So, in the end, it’s really about asking, “Do you want this more, or do you want this more?” »
Winder also noted that it’s crucial to do your research on potential purchases before heading into the Black Friday sales season.
He warns that some retailers might raise the price of an item about a month before, only to reduce it on Black Friday, giving the impression that they have significantly lowered the price, when in reality the difference may be marginal. They may also advertise sale items – especially popular electronics like laptops and cell phones – at prices comparable to higher quality products with higher features or other benefits.
Beware of promotions
However, Winder predicts that what millennials and Gen Z will need to watch out for most this year are “buy now, pay later” promotions, where customers can make large purchases and pay for them in installments. payments over time.
“It’s not a deceptive practice, but it’s one of those things that, as a buyer, you have to be careful about,” he said, “because you might forget that you bought a lot of things and all of a sudden you get these surprise bills. »
For younger Canadians in particular – whose cash flow may be limited due to student loan payments, high rental costs and other expenses – these extra payments can pose a serious threat to their financial goals, even if they may seem attractive at first.
Mme Ho adds that it’s essential to be aware of these types of marketing tactics as well as others, like free shipping tied to a minimum spend, to reduce the risk of getting caught up in the Friday hype. mad.
“These are things that people are aware of are generally problematic, but when you’re in the mindset of spending, it can be easier to be sensitive to them,” he said. she pointed out.
“So doing your research and having a list of what you really want and need before you shop will help you keep things under control. »
And if shoppers view Black Friday as a way to find the perfect gifts for friends and family on a newly restricted budget, Winder reminded, one of the most important things might be learning to readjust that what we expect of ourselves and others this year.
“You know, people are hesitant to talk about what they can or can’t afford,” he said.
“But it’s a tough time, and there’s nothing wrong with telling your friends and family that you need to cut back a little – you just need to give yourself permission to do so. »