Psychologists explain why discount wars are increasing

Annual low-price sales events such as Singles’ Day and Cyber ​​Monday put pressure on customers, the environment and retailers. Why they still have the upper hand.

Maximilian Jacobi/ch media

It makes no difference whether you're snorting coke or looking for a bargain. At least Christian Elger doesn't think so. German researchers examined subjects' brain waves while they shopped online. Elger discovered that when a bargain is available, the brain releases the happy hormone dopamine. Falling prices affect us similarly to drugs. “The discount signal works like cocaine,” he once said in an interview.

prisoner's dilemma

On a neurological level, this explains why consumers binge on Black Friday, November 29th. Equally interesting is explaining why consumer holidays like Black Friday and Cyber ​​Monday stick around. This is despite the fact that their usefulness is questionable from many perspectives.

“It's a game that no one can escape,” says business psychologist Christian Fichte. “The retail industry probably wouldn’t mind if days like Black Friday were banned.” He used the prisoner’s dilemma from game theory to explain why it’s difficult for retailers to get out of discount wars:

Two accomplices are serving five years in prison. The guards separated the two men and made them an offer: they could shorten their sentences by testifying against each other. If someone does so, their sentence will be reduced to three years, while the defendant's sentence will be doubled to ten years. If both men remain silent, the sentence remains five years. If both men sang, both men's sentences would be extended to seven years. Here's the thing: co-conspirators can't talk to each other. In order to avoid the risk of ten years in prison, they had to betray each other.

creation of monsters

The discount war is also conducted based on this principle. It's advantageous for the company to sell televisions at traditional prices. But it has no idea what the game is planning. Anything is better than staring at the TV. Therefore, they would rather sell at a low price than not at all.

It is better to sell the TV cheaply than not to sell it at all.Image: KEYSTONE

Manor owner Roland Armbruster also confirmed that retailers were affected by such discounts. “It is no longer possible not to offer discounts today,” he told CH Media a year ago. In 2015, Manor became the first retailer to introduce Black Friday to Switzerland. You could say department stores have created a monster.

The federal government once issued discounted licenses

But it doesn't stop with this monster: “We are stuck in more and more discounts and it's hard to get out of it,” says Bernhard Egger. Never mind that discounts in the country of origin usually have no purpose other than to stimulate consumption. There are an increasing number of events surrounding traditional holidays such as Christmas and Easter:

The reason the discount wars and low-price vortex didn't hit Switzerland earlier was because of restrictive laws. It was not until 1994 that the Federal Council revised the Anti-Unfair Competition Law and announced “sales liberalization.” Before that happens, sales must be approved by authorities.

Thirty years later, election day is as much a part of the run-up to Christmas as Santa Claus. Every year, the special deals platform Blackfridaydeals.ch estimates Black Friday sales across Switzerland. After rising slightly to 490 million Swiss francs last year, it is expected to drop by 20 million Swiss francs this year. Julian Zrotz, managing director of Blackfridaydeals.ch, said: “Competition is calming down.” This is due to the large number of bankruptcies of retailers such as M-Electronics, Sportx, Steg, Esprit and Microspot.

For critics of the discount wars, this may still be the only hope: sale days like Black Friday will slowly fade away. In 2020, a National Council motion asked the federal government to stop “practices such as Cyber ​​Monday.” The request was denied. (bzbasel.ch)

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