Should retailers take part in Black Friday promotions?

Black Friday will be upon us soon, and this promotional period can present some tricky choices for brands.

The extra traffic and sheer level of interest in the event presents opportunities for retailers to drive sales and acquire new customers, but not all retailers are happy about Black Friday.

Using data from our Black Friday ecommerce guide, we look at some of the pros and cons of Black Friday for online retailers, and strategies for discounting without seriously impacting margins.

The benefits of Black Friday for retailers

Every year, Black Friday seemingly increases in popularity, with online sales experiencing solid growth year on year.

Black Friday is now the biggest single online shopping day of the year in the UK, closely followed by Cyber Monday. In the US, the reverse is often true, with Cyber Monday sales outstripping Black Friday.

The sheer level of interest and the potential to attract large volumes of traffic from sales shoppers makes Black Friday hard to ignore for most retailers.

It represents an opportunity to drive sales and revenue for ecommerce sites, as well as for new customer acquisition. If retailers can retain a good percentage of acquired customers, then the cost of discounting may pay off in the longer term.

Black Friday sales also offer a valuable opportunity to clear old inventory in order to introduce newer stock just in time for Christmas.

This applies to fashion retailers with older lines, but electronics retailers can also offer discounts on TVs and laptops knowing that newer models are coming soon.

We’ve surveyed retailers for their thoughts on Black Friday in the past, and most tend to favour involvement in Black Friday, with many considering it more important than Christmas when planning strategy.

The sheer opportunity offered by increased traffic and customers ready to buy means that many retailers simply cannot ignore Black Friday.

Why some retailers choose to do something different on Black Friday

Retailers may feel under pressure to discount, but some brands choose to take a different approach to Black Friday. Some retailers, such as Asda, Next and IKEA have chosen to avoid Black Friday promotions in recent years.

Others have done the same, but have added more purpose to their rejection of Black Friday discounts, and used it as a brand-building exercise instead.

For example, FatFace has previously donated a portion of its profits to charity, and retailers like REI in the US have opted out, giving employees the day off and encouraging customers to try the great outdoors instead.

Everlane, which promotes its ‘radical transparency’ around its supply chain, has previously donated profits to environmental causes, and this year has a Black Friday Fund with the aim of reducing plastic beach litter.

Smart promotional strategies

For the majority of retailers who will take part in Black Friday, it’s important to strike the right balance with promotional strategies.

Some customers may expect huge discounts, but retailers really need to remain focused on the value it delivers to them. If Black Friday promotions are part of a well thought out strategy, based on what they’ve learned from previous years, then they can pay off.

If retailers have old inventory to shift or have an aggressive customer acquisition strategy, then generous discounts can be worth it.

Other retailers may want to consider being a little smarter with promotional strategies, ensuring that they keep an eye on margins, or can justify discounts with extra cross-sells or repeat purchases.

For example, incentives such as giving away vouchers and gift cards with purchases is a good alternative to straight forward discounts.

In this case, people are still making the initial purchase at full price, but the voucher gives them an incentive to return and buy again later on.

Another approach is to use discounts to target certain customer segments. This may be valuable customer groups to reward their loyalty, or perhaps to re-engage customers who haven’t made a purchase for some time.

Black Friday, Cyber Monday and the days around these sales events represent a massive opportunity for online retailers.

Execute strategy well and retailers can enjoy a huge sales boost, while also acquiring lots of new customers that they can sell to over the Christmas shopping season and beyond.

For more data on Black Friday, and tips on strategy for retailers, see our Black Friday Ecommerce Guide.

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