Why Retailers are Boycotting Black Friday: To sell or not to sell?

(Reading time: approximately 5 minutes)

 

Black Friday is coming. This used to be an American tradition that occurred on the fourth Thursday of every November, after American thanksgiving. In 2014, retailers raked in $50.9 billion in sales, and 133 million U.S. consumers feverishly shopped for great deals.

 

As a consumer, I’ve partaken of this event, driving down from Toronto to join in the feverish frenzy. I love the sense of urgency and energetic buzz that comes with shopping with a mob. And who doesn’t love a great deal? There are lots of reason to sell your products on Black Friday, but the road to great sales is fraught with peril. We’ve noticed a shift away from all of the madness and have picked up on a bunch of retailers boycotting Black Friday. We wanted to pin down why some brands and retailers are choosing to boycott Black Friday and if they are what else they are doing to drive their business upward.

 

Brands need to balance expectations with reality

 

For retailers, Black Friday presents an entirely different issue altogether. As with all great sales, the need to drive bigger sales volumes year and better volumes every year has driven stores to open earlier and earlier to ensure better sales volumes from the year before. That also means better deals and more discounts.

 

Adidas Sale

 

Big box retailers like Walmart, Amazon and Best Buy regularly search for highly discounted deals from vendors to appeal to as many of the 133 million shoppers as possible.  Remember that Amazon and Walmart have promised to be the lowest price in the market always. Popular items for Black Friday at Walmart are products like iPads, televisions, toys and game consoles.

 

Why some brands and retailers choose to participate in Black Friday

 

Here’s a fun fact: Black Friday is aptly named for the big day of sales that takes retailers “into the black” or back into the profit side of the ledger.  For a vendor that is considering participation in Black Friday, this one day can help you hit your sales targets for the entire year.

 

Take a second to think about the opposite. Participation in Black Friday sets you on a path to repeat what you did the previous year. Year after year. Boycotting Black Friday is difficult. It is not easy to replace such a large volume sold on a single day of sales. If you are looking to clear inventory or create excitement around your brand, Black Friday can be a great idea for your business.

 

There’s a conundrum about selling products today vs staying in business tomorrow

 

What is the “right price” for your product? What is the lowest price you can sell your product at and maintain the integrity of your brand? What happens when you reach uncomfortable levels of discounting?

 

Price discounting is something every brand does but should do deliberately and with a purpose. Most brands have a very good idea of how price sensitive their products are. You should know the answers to these questions before you decide to work with a retailer to sell your products on Black Friday.

 

There is a growing movement not to participate in Black Friday. The most recent and most publicized is sports retailer REI. The sports retailer is shutting all 143 of their retail locations, headquarters and two distribution centers and giving their 12,000 full- and part-time employees paid time off on Black Friday.  The message REI is sending is really two-fold: They are subtly telling consumers to ‘take a hike’ (literally) and get some exercise and celebrate Thanksgiving, but the company is also telling shoppers to take a hike and leave Black Friday behind.

 

 

This is a classic situation of knowing your brand and pricing thresholds. Sporting retailers like REI that support outdoor lifestyle activities don’t have to discount their brands heavily to generate sales, and risk offending their most loyal customers by doing so. This trend has picked up momentum and has been carried forward by Staples, GameStop, Half Price Books, P.C. Richard & Son, and Mattress Firm.  You can track REI’s latest updates by checking out their hashtag #optoutside.

 

 

REI opt outside

 

 

Consider the aftermath pricing discounts have on your brand equity

 

Heavy discounting erodes brand equity and signals the consumer that your brand can be bought on discount. Every brand has unique shopping patterns, but you must consider the effect on your business after Black Friday. When a consumer buys your product or products on Black Friday, how long are you removing them from the market? When will they come back and buy?

 

Here are some things to think about when you’re considering Black Friday discounts.

 

  • How long will it take your customer to come back and buy again?
  • Does the volume of Black Friday require a slow-down of sales for a couple of weeks after?
  • What will you do to replace this volume next year?

 

Consider other ways to drive your business upwards

 

Pricing is but one mechanism to stimulate sales. It’s the simplest to activate, so it is overused. Think about the different levers for your business. Black Friday can represent a chance to test new offers with consumers, or to help you reward those faithful followers. What do you hope to accomplish with your business? Here are some other concepts to consider:

 

  • Drive trial – sell or give away sample products. Make a size for someone to try.
  • Engage loyalty – offer a gift with purchase.
  • Build your shopping basket – sell a set of products for a unique price.

 

These things help you to drive other levers of your business. I personally love building your shopping basket because you can teach consumers about the other parts of your lineup while making a value proposition. The side benefit is that you clear some inventory, make deal-crazy shoppers happy and maintain the integrity of your brand.

 

All of the points we touched on above can help you to grow your business and increase market share without the negative effects of price discounting. Black Friday is a great occasion to sell more products and build volume. It’s a good sales opportunity. Be sure to think before you leap and you’ll keep it that way for years to come. Did you see any retailers surprise you with their involvement or non involvement in Black Friday this year? Let us know in the comments below!

 

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