Life is tough for retailers, whether clicks or bricks; the race to the bottom on price has been relentless since consumers have all the data they need in their hands (the internet on their mobile phones). But surely, when demand is already high for Christmas, you don’t need to discount?
I’m of an age where I remember the ‘January Sales’, which were introduced to stimulate sales after Christmas. This made sense as, during December, consumers were already buying, so the January sales increased demand when it would have otherwise been low. In addition, retailers were clearing Christmas stock to make way for their spring collections.
However, consumers got savvy and started to ask parents and partners for money at Christmas, getting that ‘new leather jacket’ or ‘games console’ at a discount in January. As a result, retailers didn’t get incremental sales in January, just reduced December revenue.
Retailers pulled the January sale forward, so it became a ‘Boxing Day Sale’ and then a ‘Christmas Eve Sale’ as the herd mentality created a race to the bottom and a need to be first with a customer offer. By now, retailers were factoring into their supply chain products purchased specifically to discount for the sale, but does this really lead to more profit?
The advent of ‘Black Friday’, an American concept centred around Thanksgiving, was introduced in 2010 by Amazon, then by ASDA in 2013, and the rest is history. Again, the herd mentality has driven almost every retailer to join the Black Friday bandwagon, like it or not. And once again, some retailers jump the gun with their deals, offering them in advance of Black Friday, starting in mid-November!
Whereas the original January sales were just that, Black Friday is often accused of cynical pricing tactics to create offers and discounts that are not as tempting as they may appear. From Which? Magazine to Martin Lewis the validity of many offers is often challenged.
Traditional supply and demand theory would say you promote when demand is low, not when it is high. So, is it counter-intuitive to discount before Christmas? It is, but Black Friday is now a marketing strategy, not a stock rotation or supply chain instrument. Just like the permanent DFS sale, Black Friday is now taken for granted and expected by the public, so the retail herd follows.
The impact of Black Friday seems to be waning, so what will be the next retail event to encourage Christmas spending? Will there be a spooky sale after Halloween or a price rollback when the clocks go back?
Written without AI.