Rethinking Black Friday: 5 reasons why small local businesses should step back from the sales frenzy
Andreea Stoinescu 12:41 - 20 November 2023
Black Friday, the annual retail bonanza, has become synonymous with unrivalled sales and frenetic shopping. However, as this much-anticipated day approaches, it's time for businesses to question whether participating in this tradition is truly in their best interest. This global phenomenon, while profitable at first glance, comes with hidden costs that go beyond the bottom line. In an age where mindful consumerism and brand authenticity take precedence, there are substantial reasons for businesses to pause and reconsider their engagement with the Black Friday frenzy.
By understanding the impacts on customers, employees, and the broader marketplace, businesses, especially small ones, can explore alternative strategies to nurture long-term success and sustainability.
- Customer Overwhelm: Black Friday can create decision overload for consumers, who may end up purchasing nothing due to the paradox of choice, where too many options lead to decision paralysis.
- Profit Margin Squeeze: Black Friday deals often cut deeply into profit margins. Companies sacrifice earnings for volume, which isn't always sustainable long-term. A well planned black Friday campaign requires careful calculations of profit margins and possible support from partners on volume discounts, which for a small business may not be easily accessible and easy to organize.
- Unhealthy Consumerism: This event perpetuates a cycle of overconsumption and waste, contributing to an environmentally and economically unsustainable model of business.
- Workforce Stress: a high influx of orders in a very short period of time may put employees under immense pressure and overwhelm, leading to customer service failures and potential damage to a company's reputation.
- Short-term Gains vs. Long-term Relationships: While Black Friday can drive quick sales, it does little to foster loyalty or encourage repeat business, which is essential for the sustained growth of a small local business.
- Unfair Competition: Small businesses often cannot compete with the doorbuster deals that big-box retailers offer, which can drive them out of business or marginalize their presence in the market on certain product categories.
At Pastel Gifts, a curated gifts business based in Nicosia with operations all over Cyprus, we have chosen to opt-out of the Black Friday rush. Our model does not operate with high margins and we are not aligning with the messaging around Black Friday. As such, every year we take a step back and in November we choose to focus only on making and preparing our Christmas collection.
By stepping away from traditional Black Friday campaigns, companies like us can focus on building brand integrity, improving customer relations, and setting the stage for sustainable sales practices that benefit the economy and the environment alike.
Types of companies for which organizing a Black Friday campaign may not recommended
- Boutique and Specialty Shops: Small-scale, artisan, or specialty stores that thrive on exclusivity and a curated customer experience may find Black Friday campaigns damaging to their brand image. The discount-driven frenzy of Black Friday is often at odds with the crafted narratives and premium quality these businesses promote.
- High-End Luxury Brands: For brands that market themselves on exclusivity and high value, a discount event like Black Friday could tarnish brand reputation. Luxury consumers are often less price-sensitive, seeking status and distinction over deals, making discount events less relevant and potentially harmful to the brand's cachet.
- Business-to-Business (B2B) Companies: With longer sales cycles and more personal relationships, the B2B sector may not find Black Friday campaigns effective, as purchasing decisions are not driven by impulse buying in the same way as consumer sales.
For these type of companies, focusing on brand building and customer relationships outside of aggressive discount events may result in better long-term benefits.
Companies for which Black Friday could be a great option to introduce in their yearly marketing campaigns:
- Electronics Retailers: By offering deals on last year's models or to clear inventory before new releases, these companies can highly benefit from Black Friday. For tech enthusiasts waiting for price drops on gadgets they've eyed all year, Black Friday can be the perfect opportunity to purchase.
- Large Chain Retailers: Benefiting of economies of scale, big-box stores can afford to slash prices significantly, using Black Friday as a "loss leader" strategy to draw in massive foot traffic and drive sales of non-discounted items.
- Online Marketplaces: Big platforms like eBay or Amazon can capitalize on Black Friday by hosting deals across various categories, targeting their vast audience and having the ability to offer door-buster deals without the brick-and-mortar chaos.
- Home Appliance Manufacturers: Black Friday falls conveniently at a time when people are preparing their homes for the holidays, making it an ideal occasion for companies to promote discounts on major household appliances.
For these types of companies, Black Friday can be an opportunity to increase annual sales volumes, acquire new customers, and engage in the festive season's shopping spirit, provided they manage the event with strategic discounting and customer experience at the forefront.
As Black Friday's consequences for small businesses become clearer, many are pushing back, advocating for a focus on sustainable practices that uphold economic and environmental values while nurturing the community ethos that local businesses embody. This new trend reflects a growing awareness among local enterprises of the need to balance short-term gains with the long-term vision for their brands and the communities they serve.
By Andreea Stoinescu, Founder of Pastel Gifts