Five reasons why small local businesses shouldn't get caught up in the sales frenzy
By Andreea Stoinescu, Founder of Pastel Gifts
Black Friday, the established annual retail day, has become synonymous with unbeatable discounts and frenzied shopping. However, as this long-awaited day approaches, it's also time for businesses to ask themselves whether participating in Black Friday is really in their best interest. This global phenomenon, although profitable at first glance, comes with hidden costs that leave no room for profitability. Probably the opposite. In an age where mindful consumerism and brand authenticity take precedence, there are substantial reasons for businesses to pause and reconsider their involvement in the Black Friday frenzy.
By understanding the impact on customers, employees and the wider market, businesses, especially small ones, can explore alternative strategies to cultivate long-term success and sustainability.
- Overload >: Black Friday may create decision overload for consumers, who may end up not buying anything due to the “paradox of choice,” where too many choices eventually lead to decision paralysis.
- < strong>Profit margin compression:Black Friday deals often cut into profit margins. Companies are sacrificing profits for volume, which is not sustainable in the long run. A well-planned Black Friday campaign requires careful calculations of profit margins and possible support from partners for discounts when the volume of products is high, which for a small business is almost impossible to achieve the legitimate high volume of sales that makes these sales profitable.
- Unhealthy consumerism:This fact perpetuates a cycle of overconsumption and waste, contributing to an environmentally and financially unsustainable business model.
- Workforce Stress: A large influx of orders in a very short period of time can put employees under tremendous pressure and overload, leading to customer service failures as well as potential damage to a company's reputation.
- Short-term profits vs. long-term relationships: While Black Friday may lead to brisk sales, it doesn't do much to foster loyalty or customer retention, which is necessary for the sustainable growth of a small business.
- Unfair Competition:
- Unfair Competition:
strong> Small businesses are often unable to compete with the offerings of large retail chains, which can lead them to close or marginalize their market presence in certain product categories.
< p>At Pastel Gifts, a gifts company based in Nicosia and operating all over Cyprus, we have chosen not to participate in the Black Friday frenzy. Our model does not work with high profit margins and we do not align with the general messages of the particular day. Therefore, every November we take a step back and choose to focus only on building and preparing our Christmas collection.
By moving away from traditional Black Friday campaigns, companies like ours can focus on building brand integrity, improving customer relationships and creating the conditions for sustainable sales practices that benefit both the economy and the environment.< /p>
Types of companies for which it is not recommended to run a Black Friday campaign
- Boutiques and specialty stores:Small-scale, craft or specialty stores that live off of exclusivity and a distinct customer experience may find Black Friday campaigns damaging to their brand image. The frenzy of Black Friday sales often contrasts with the thoughtful narratives and premium quality these businesses promote.
- High-end luxury brands: For name brands that market exclusivity and high value, a discount event like Black Friday could tarnish their reputation. Luxury consumers are often less 'price sensitive', seeking prestige and distinction rather than deals, making discount events potentially damaging to brand prestige.
- Business-to-Business Companies (B2B): 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 purchases in the same way as consumer sales.
For these types of companies, focusing on brand building and customer relationships outside of aggressive discount events may have better long-term benefits.
Companies for which the Black Friday could be a great option to introduce into their annual marketing campaigns:
- Electronics retailers:These companies can especially take advantage of Black Friday, with special offers on last year's models or to clear out their inventory before new releases. For tech enthusiasts waiting for price cuts on gadgets they've had their eye on all year, Black Friday can be the perfect shopping opportunity.
- Major retail chains:Benefiting from economies of scale, big box stores can afford to cut prices significantly, using Black Friday as a “loss leader” strategy to attract mass traffic and drive sales of non-discounted items.
- Home appliance manufacturers: Black Friday coincides with the time when people prepare their homes for the holidays, making it the perfect opportunity for companies to promote discounts on major home appliances.
< li>Online shopping:Big platforms like eBay or Amazon can take advantage of Black Friday, with offers in various categories, targeting their huge audience and being able to put very big offers free from the chaos of traditional, brick-and-mortar stores.
For these types of companies, Black Friday can be an opportunity to increase annual sales volume, acquire new customers and participate in the holiday shopping spirit, provided they manage the event with strategic discounts and with the customer experience at the fore.
As the consequences of Black Friday for small businesses become increasingly clear, many of them are responding by advocating a focus on sustainable practices that support economic and environmental values, while at the same time cultivating the community ethos embodied by local businesses. This new trend reflects a growing awareness of the need to balance short-term profits with the long-term vision for their brands and the communities they serve.
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