2020 is about to get even more peculiar as we head into the Sales Season. Black Friday on 27 November and Cyber Monday on the 30th loom on the horizon. Will we (as consumers) be able to conquer our impulse buying this year? If so – will it be due to the economic glooms of the global recession or the increased use of data science and AI in marketing, which, supposedly, should help us make “better” (more optimal) decisions?
Black Friday is typically portrayed in the media by hours of queuing and disgruntled customers battering down doors and each other only to end up with overpriced things they do not want or need. Overspending and impulse buying throughout sales are notorious. But in 2020 these sales are affected by two major factors.
On the one hand, it is coronavirus. In the UK, all non-essential stores remain temporarily closed, causing eCommerce to soar. Globally, the economic crisis is a reality with many people losing their incomes as unemployment in the US, UK, and other countries could surpass the Great Depression numbers. Naturally, this hits the purchasing power of consumers, who become more inventive with their shopping. Luxury brands appear to suffer most as people turn from non-essentials to groceries with over 60% of consumers in India, Indonesia, China, Brazil, Mexico, South Africa, US, Italy, Spain, and UK turning away from their favourite brands and trying different shopping behaviours (e.g., buying clothing tops rather than bottoms to look good at all those web conferences).
On the other hand, it is AI. Online Black Friday shopping overtook in-store sales back in 2016, and people are used to internet retail. Naturally, this change catalysed the development of various data-driven digital marketing technologies, which should be peaking this year. With over 30% of companies using AI in their retail chains as well as data insights for business growing eight times faster than GDP, the coming sales will be a fantastic playground for business data science innovation. Chatbots which “work” 24/7, personalised content sent to consumer mailboxes, social media “listening” and topic hijacking, working with social media influencers, automated ads and ad creation, sophisticated predictive analytics techniques – all these tools will be thrown at the feet of “stay-at-home” consumers with much thinner wallets than last year. But will these tools benefit consumer well-being?
AI and consumption
Although recently academics have called for recommender systems and personalisation algorithms that consider the individual’s well-being, most often the advantages of automated systems go to business at the cost of the consumer (as demonstrated in the recent The Social Dilemma documentary). Research suggests that consumer psychology will remain unaffected by the move to eCommerce. Seasonal sales have previously been linked to greater hedonism, impulsiveness, and a “throw away” mindset (e.g., consumers demonstrate greater plastic bag consumption over the holiday period). This will not go away and may be even catalysed by the use of data-driven technology and analytics.
There is also something more primal about sales which will remain unchanged. Words and phrases such as “sale” “deal” and “one time only” trigger the reward circuits in our brain – tapping into the scarcity heuristic. The feeling that something is in short supply plays on our ancestral fears of limited resources. If this year’s pandemic-related panic buying has shown us anything, it is that the innate urge to ensure oneself and one’s kin are not going away, and is still very much driving our consumer behaviour today. The “fear of missing out” is further reinforced by another evolutionary need – that of social approval, which today is exacerbated by social media. AI also cannot deliver an important familial bonding experience, which happens during seasonal sales in physical spaces and is impossible to achieve digitally.
Yet, there is also a silver lining. Despite the economic downturn, certain products’ year-on-year growth rate have rocketed: items like the old-fashioned skipping rope up 998%, washing machines (817%), handsaws (599%), weights (258%), and culinary essentials like olive oil up 458%. Also, rather contradictory to the global impact of AI-induced marketing, there has been an increased desire to “shop local” and support smaller businesses.
Overall, 2020 seasonal sales hold the potential to add a much-needed boost of excitement. The battleground will be between the data-driven innovation of businesses and the human psyche. Retailers need to adapt to the online opportunities, optimise user experience, operate securely, and use data to good effect. Yet, despite all this AI-sophistication, simple things like preventing retailer websites from crashing will likely come out as a top priority for consumers this year.
So, keep calm, carry on, but please think twice whether you need those extra 10 shirts, especially if they are two sizes too small...