Why Black Friday is to retailers what Christmas is to turkeys
Black Friday has been around for a while and is reputed to still be the biggest shopping day of the year in the US. When the term was first coined, it was an event created to capitalise on the large number of Americans taking the day off after Thanksgiving to start their holiday shopping – a day when retailers moved from the ‘red’ to the ‘black’. It came to the UK in 2013 accompanied by the pitiful sight of British shoppers assaulting each other in pursuit of a cut price telly in ASDA
But whilst it might be offering retailers a short term sales boost, it runs the risk of destroying them in the longer run. In fact the damage may already have been done. For one thing, it’s no longer just a day. Here in the UK Black Friday deals have been running for at least a week already, and are set to continue into early December. Marketers and researchers who know a thing or two will tell you that price promotions don’t increase sales in the long run, they merely move the timing of purchases. A case in point: John Lewis reported a +8% sales increase during a recent Black Friday week but a 1% drop in sales for the year overall. So to start discounting heavily at what should be your peak selling period makes no sense at all.
Secondly, once you’ve entered the Black Friday discounting game, it’s hard to go back. Price is most retailers’ or brands’ single biggest weapon of self-destruction. To feel obliged or panicked into joining a discounting frenzy implies a lack of belief that your brand has much else to offer.
So how do you put the genie back in the bottle?
Beyond the day job I’m a jewellery designer/maker. One of the platforms I sell on, Etsy, is trying to encourage me to participate in their 20% off everything cyber event starting tomorrow. I’m holding my nerve and refusing to play, After all Etsy’s a marketplace: that means if a product has a market and is well priced it will sell. My orders are up 82% on my best year ever and revenue has more than doubled year on year. Instead I’m going to believe in my brand for the long run, not just the next week, and sit it out.
And that’s what strong, well managed brands should do. My first job when I moved out of Thanet and up in the world was as a media buyer. When the FT had an empty advertising page available short term they would give it away rather than discount it, a unique position amongst British print media owners. For the FT to start discounting would make every conversation a negotiation at a time when your options were ratecard or nothing. They did it to protect their yields and their brand in the long term. As far as I’m aware the FT is still around and faring better than most of its peers from that time.
And on the High Street, Zara runs just two sales a year and I, for one, get quite excited by their scarcity. Admittedly they also do something on Black Friday itself but just for one day. Zara is a brand that knows its market, prices well and doesn’t look to devalue that by constant discounting.
Having that long term vision and belief in the value in your brand is key. Driven by the availability of on-tap measurement, there's been a terrifying shift in the last decade from long term strategic thinking to fretting about yesterday's data. It's leading to more and more firefighting tactics at the expense of strategy to the point that I'm starting to think that some brands and retailers don't really believe themselves that they'll still be around in 5 years.
With double digit inflation and considerable economic uncertainty this Christmas could go either way for retailers. But if it goes badly retailers need to share some of the blame for their own downfall. Because once we’ve got Black Friday out of the way, they’ll hit us with Cyber Monday, and then the Christmas sales in mid December. It’s a tired old argument to say the High Street is being killed by online: smart retailers are omnichannel brands and shouldn’t really care whether you turn up to buy it yourself or have it delivered. Instead it’s this continuous discounting that’s consolidating us as a nation where cheapness matters above all else. That’s not a world brands can thrive in. The British shopper has always loved a deal, it’s just that now they won’t get out of bed for anything less than 40% off.