Black Friday is the annual event where many retailers and other businesses offer special discounts for one day only. Previously, the day was only considered to be an American event, but more recently British shops have been jumping on the bandwagon to pull shoppers to their stores just before Christmas.
This has helped to boost sales during a critical period for retailers and helps to prepare them for the upcoming seasonal period. However, is there any benefit for the annual event or has it become a financial liability?
Increase In Costs
One of the biggest concerns with Black Friday is that there are often costs when it comes to advertising the event. In 2014, retailers spent 145% more on internet advertising for the day than any of the previous 10 days. In 2013, there was a similar increase in costs on Black Friday.
Are these costs justified? This would depend on the profits generated by UK retailers. During the day, retailers did see a rise in visitors and spending on their sites, with traffic up 60% and online sales up roughly £180 million. However, this isn’t in line with the spending, therefore, it can be expected that costs per sale increased.
At the same time, the amount of traffic generated by Black Friday did cause some embarrassment. For some, this was just a site that was generally slower while other sites were so busy that their servers went down and were inaccessible. This potential in lost revenue is significant; research has shown that for every second it takes for your website to load, you lose 7% and therefore, without proper infrastructure in place, many businesses might have suffered significantly on the day.
Customer Expectations
Another problem is that many customers expect that larger and smaller retailers will now hold a black Friday event. This is important because it lowers the price expectancy of customers and makes it harder for retailers to charge a fair amount for goods.
Also, it is harder for smaller retailers to generate a significant return on goods sold. Amazon and Ebay, both large online retailers, look to encourage their users to buy from them. With their marketing and buying power, this can often mean smaller organisations are not going to be able to match their prices.
At the same time, other large retailers, like Tesco, have seen profits tumble. They can hardly expect to continue to offer discounts to meet consumer demands if they expect to keep up with their competitors. Tesco have already had to cancel several planned new stores and closed other stores that aren’t performing well.
Stores Disappearing From The High Street
Additionally, numerous stores are failing to keep up with the demands of the modern consumer market with well known brands now disappearing from our high streets. So businesses need to consider if they can afford Black Friday or not.
How To Make The Most Of Black Friday
For those that want to make Black Friday a success, there are certain activities that should be started now to make it an effective sales day without costing too much. These include:
- Invest in proper digital marketing campaigns from blogging, social media and email marketing. These are highly effective and cost less than Pay-Per-Click but they do take a while to become established.
- Let customers who come into the shop know at least one month in advance of the special deal and sign them up for the mailing list / text message alerts.
- Add marketing information on your till receipts about the special day or include a promotional flyer with every purchase.
- Get your staff talking about the events on social media, in their social groups and in the store. The more hype generated, the greater the turnout on the day.
Conclusion
First you need to decide if Black Friday is for you. If the answer is “yes” and you want to have a successful Black Friday you need to be prepared. Look at the most cost effective ways to market your business so you don’t spend too much on advertising streams that will limit your potential profits.
If you want to speak to someone about limiting your financial expenditure, then have a chat with a member of the Tectona Partnership Team. We’re here to help.