Black Friday Is Bad for Retailers, Apparently

Despite ever-increasing sales figures, a recent piece from Quartz is arguing that Black Friday and Cyber Monday are actually bad for the retailers who participate, or at least the retailers who participate in the traditional, price-slashing fashion.

According to the story, “Americans spent $6.2 billion on Black Friday and $7.9 billion on Cyber Monday” in 2018, “a 23.6% and 19.7% growth year on year” respectively. Last year’s Cyber Monday was also the “US’s biggest online shopping day of all time,” — but, the writer posits, not all sales are equal.

Within all consumer ecosystems, he argues, there are “high-value customers” and “low-value customers.” The former “have an ongoing relationship with a retailer and make high-margin purchases throughout the year,” while the latter are the exact opposite.

And on Black Friday, “retailers tend to overly invest in low-value customers, pulling out all the stops in the hopes that doing so will somehow turn low-value customers into high-value customers,” even though all available data indicates that this will never happen.

So what should retailers do instead?

The story offers three strategies: could skip the festivities altogether, which hasn’t dramatically impacted the bottom lines of anti-practitioners like Patagonia and REI. They could “aim low,” offering smaller discounts or promotions on a specific set of items. Or they could “aim high,” and use the day to reward their high-value customers by providing them with exclusive opportunities, a la Nordstrom’s private sale.

“The bottom line,” he argues, “is that retailers shouldn’t feel compelled to run conventional Black Friday sales just because their competitors are doing it.” And with that said, please enjoy this year’s Black Friday Sale Round-Up.

You can read more about it at Quartz.

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