Should I discount for Black Friday?
Black Friday is seen as a big opportunity for shoppers to grab a pre-Christmas bargain. Whilst the big retailers claim to be offering great deals, you may be asking ‘as a small retailer should I take part?’
With so much hype over what is now far more than just a day, or even a weekend, it is very easy to get drawn in. You may not want to feel left out, and you want your customers to stay loyal to you after all.
I have guided small retailers through the decision making since Black Friday first arrived on these shores. Let’s take a look at why you should, or possibly shouldn’t, get involved.
Promoting your business
As a small retailer you cannot match the advertising and promotion campaigns of big business. By taking part you may feel you are keeping your business name out there. Shoppers, particularly with Black Friday deals, will do a lot of research and you want them to see your name, don’t you?
Surely then if you are not offering anything you will not get noticed. Does this mean you have missed the opportunity to attract new customers?
Well, probably not. Much as you may like to think so, your business is does not have the same resources of big business. Shoppers are far more likely to look at their websites and their adverts, because that is where they perceive the biggest discounts to be.
Your loyal customers will not expect you to offer big discounts. They will keep coming to you because you offer the products and service they are looking for, repeatedly!
Can you afford it?
Black Friday offers the chance to sell a lot, very quickly. This provides that much needed cashflow boost. A chance to fund the additional stock needed for Christmas and to fund your personal Christmas spending.
Large retailers will have been gearing up for Black Friday for months in advance. Not only that, they will have been preparing their pricing to make their Black Friday deals look better than they are.
That’s a bit cynical I hear you cry! Maybe, but year-on-year research has shown some of the best looking deals are not quite as generous as they seem.
By all means, if you have stock that is simply not shifting then discounting it is a good idea. It’s costing you money to keep so why not sell it off, even if it is at a loss? In this instance, it’s better than nothing.
If you join in and sell your stock at discounted prices you may get that cashflow boost. But it will be short-lived. You have to re-stock and you will have made little if any money. You are back where you started.
The long-term cost
Getting customers through your door gives you the opportunity to show off your business. By offering discounts you may get the chance to impress more potential customers and obtain long-term business.
This may well succeed to a certain extent, but research shows it is a very expensive way of getting new customers and can actually cause long-term damage. Why?
- It creates an expectation from the customer. They perceive that the discounted price is what it is worth and they are not going to pay more.
- It devalues your product and service. Why should your loyal customers pay more when you can provide the product at this lower price?
- It changes your perception of your service. The strength of the small retailer is in their personal service. With customers paying less it is a natural reaction to provide less. This often comes with a lowering of service quality.
Think about this from your own experience. How many of us would shop at DFS when they are not advertising a sale?
Are there alternatives?
Small Business Saturday takes place on the first Saturday of December. This is a chance for Small Businesses to promote themselves, for consumers to ‘shop small’, and for you to show off what you do best.
Don’t discount – add value! Treat your loyal and potential customers to a little something extra rather than discounting the price.
For example, a loyalty reward scheme, regular email updates, tutorials through your website to help your customers, and invitations to preview evenings.