Black Friday: Retailers With The Best Deals

Black Friday is one of the biggest shopping days of the year, with retailers offering huge discounts to customers. It is the day after Thanksgiving and marks the beginning of the holiday shopping season. Over the years, Black Friday has become a highly anticipated event for shoppers looking to take advantage of deals and promotions. This has resulted in retailers employing various strategies to attract customers and boost sales.

Some retailers have been very successful in their Black Friday campaigns, while others have struggled to see significant returns. So, which retailers do a good job on Black Friday, and what strategies do they use?

Using loss leaders to attract customers

A loss leader is an item sold for less than its market cost to attract customers and stimulate more profitable sales. This strategy is often used on Black Friday and other major sales days. Retailers that use loss leaders effectively include Amazon, Walmart, and Costco.

How Loss Leaders Work

Loss leaders are typically priced at a discount, sometimes even sold at a loss. This tactic may seem counterintuitive, but it can be effective in boosting overall sales and profits. Loss leaders can be used to clear old inventory, build customer loyalty, and attract new customers.

Advantages of Loss Leaders

• Increase in sales: Loss leaders can boost sales for discounted items and regularly priced items.
• Elimination of old products: Loss leaders help retailers clear old inventory to make room for new products.
• New customers and customer retention: Loss leaders attract new customers and increase customer loyalty, which can positively impact future profits.
• Launching new stores: Loss leader pricing can help entice customers to new store locations and build a customer base.

Types of Loss Leader Pricing Models

• Discount model: This includes tactics such as Buy One, Get One (BOGO) offers, where the second item is offered at a discount or for free.
• Coupon model: This model is suitable for items with minimal or zero marginal cost. Retailers offer credits or coupons that can be used for future purchases.

Challenges and Risks of Loss Leader Strategy

• Cherry-picking: Customers may only purchase the discounted loss leader items without buying anything else, failing to offset the loss.
• Weakened brand perception: If the target audience does not understand the nature of the discount, the brand may be perceived as cheap and lacking in quality.
• Teaching customers to wait for sales: If customers anticipate regular price drops, they may delay their purchases until a sale occurs.
• Stocking problems: Insufficient inventory forecasting can lead to running out of products, disappointing customers.

Black Friday Strategies for Retailers

To make the most of Black Friday, retailers can implement strategies such as creating staggering discounts, offering loss leaders, providing free shipping, and negotiating discounts with vendors. Additionally, segmenting email lists and offering referral rewards can help target customers effectively.

Discounting to clear old stock

• Understand your inventory through different channels: Evaluate how products are performing across different sales channels, such as online and physical stores. If a product is selling well in one channel but not the other, consider shifting your inventory to the better-performing channel.
• Optimise your warehouse space: Efficient warehouse organisation can help you find specific items more easily, create room for new stock, and prevent product damage. Consider pairing slow-moving products with related big-seller items to increase their visibility and attractiveness to shoppers.
• Bundle products: Instead of simply discounting individual items, try bundling them with popular products. Shoppers often perceive bundles as good deals, as long as they are attractively priced.
• Offer discounts strategically: Rather than applying blanket discounts, consider offering discounts to specific customer segments, such as loyal customers or new customers on their first purchase.
• Provide free shipping: Free shipping can be a deciding factor for many online shoppers. Try offering free shipping on specific groups of products you want to clear, and monitor the results.
• Return or trade excess product: If you have raw and untouched materials, suppliers may offer refunds, discounts, or credits for returns. Alternatively, consider trading excess stock with other companies in your industry to build relationships.
• Liquidate excess stock: If you cannot find another use for excess products, consider liquidation. A liquidator will buy your excess stock at a negotiated price, helping you deal with redundant inventory.
• Donate your excess inventory: If you are having difficulty selling your excess stock, consider donating it to non-profit organisations. In some locations, there may be tax credits available for these types of donations.
• Repurpose the stock: Instead of solely focusing on selling, consider repurposing slow-moving inventory for internal use, promotional purposes, or as rewards in a loyalty program. Freebies can sometimes attract customers more effectively than discounts.

Creating a brand image as a low-price distributor

Loss Leader Marketing

Loss leader marketing is a strategy where certain products are sold at a loss or a severe discount to attract customers into the store. The idea is that once customers are in the store, they will also purchase other items at regular prices, making up for the loss on the initial sale. This strategy is commonly used by retailers during Black Friday to draw in large crowds. By offering significant discounts on select items, retailers can strategically place other products along the customers' line of sight, increasing the likelihood of additional purchases.

Price Discrimination Strategies

Price discrimination is another concept that can be leveraged during Black Friday. It assumes that consumers have different purchasing power and are willing to pay different amounts for the same product. By offering heavy discounts during Black Friday, retailers can reach a wider range of consumers with varying budgets. This strategy can help retailers tap into new target markets and increase overall sales.

Early Bird Specials

Black Friday is known for its early morning doorbuster deals, which create a sense of urgency and excitement among shoppers. Retailers can offer exclusive deals to customers who arrive early, encouraging them to line up outside the store before opening hours. This tactic not only generates a buzz around the event but also rewards those who are willing to wake up early and brave the crowds.

Extended Shopping Hours

To accommodate the influx of shoppers during Black Friday, retailers often extend their store hours. This may include staying open until midnight or even 24 hours, providing shoppers with more time to browse and make purchases. By doing so, retailers can also spread out the crowds and reduce congestion within the store.

Online Deals

With the rise of e-commerce, retailers can also create a brand image as a low-price distributor by offering online deals during Black Friday. This strategy can help capture the growing number of consumers who prefer to shop online rather than in brick-and-mortar stores. Online deals may include exclusive discounts, free shipping, or early access to sales for loyal customers.

By implementing these strategies, retailers can effectively create a brand image as a low-price distributor during Black Friday, attracting price-conscious consumers and driving significant sales.

Offering employee discounts

Retailers such as Target and Wet Seal have offered temporary Black Friday staff the employee discount, which can be up to 50% off. This is a great way to show appreciation to staff and can help to boost morale during a busy period.

In addition to employee discounts, some retailers also offer perks such as food and drinks in the break room, which can help to keep staff energized and motivated. Other retailers, such as Target, offer goodies and treats in the break room throughout the holiday season, not just on Black Friday.

While employee discounts and perks can help to boost morale, it's important to also ensure that staff are being paid fairly for their work. Some retailers offer holiday pay or time-and-a-half rates for staff working on Black Friday, while others pay regular wages. It's important to note that working on Black Friday can be demanding and staff may be required to work long shifts, so offering fair compensation is essential.

Overall, offering employee discounts can be an effective way to show appreciation to staff during Black Friday. However, it's also important to ensure that staff are being fairly compensated for their time and efforts, through wages, perks, or a combination of both.

Making the most of cross-border sales

Black Friday is a huge opportunity for retailers, with thousands of bargains on offer for consumers. However, it is also a very challenging time, with retailers facing massive logistical challenges for fulfilling orders. It is important to tread a fine line between retaining market share during the busy consumer period and not cannibalizing their own sales.

• Research what kinds of products are on sale from US and other overseas retailers. Cross-border sales may be particularly strong over Black Friday, which may affect your sales in the discounted categories of goods.
• Be prepared for an increase in online sales. In recent years, there has been a shift from brick-and-mortar shopping to online methods. In 2023, consumers spent a record $9.8 billion online on Black Friday, with more than half of the spend (51.2%) on mobile devices.
• Start promoting holiday shopping deals early. Consumers are becoming more discerning and are often waiting for the best deals before they buy. Retailers can try to counter this by offering deals earlier in the season to capture consumer attention.
• Consider using loss leader marketing. This involves selling a product at a loss to bring customers into the store, who will then hopefully buy other products. On Black Friday, retailers can discount a few items and place them around the store to encourage the purchase of regularly priced items.
• Use price discrimination strategies. This involves pricing the same product differently for different consumers, based on their willingness to pay. On Black Friday, retailers can use heavy discounts to reach untapped target markets.
• Be prepared for increased customer service demands. Black Friday can be a stressful time for customers, with long lines and waits for online deliveries. Make sure you have enough staff to handle customer inquiries and that they are well-trained.
• Offer perks to staff working on Black Friday. This could include extra pay, food and drinks in the break room, and an employee discount.
• Be aware of the potential for retail arbitrage. Some consumers may be buying discounted goods on Black Friday with the intention of reselling them for a profit.
• Plan for returns. The frenzied shopping environment of Black Friday can lead to customers buying items they later regret. Handling returns is costly and time-consuming, so try to make the returns process as smooth as possible for both the customer and your business.

Frequently asked questions