Think twice this Black Friday

Do think twice about your purchases. Especially this week, which has become to be known as the Black week, and is called by many names. 

By Paulina Vinter

Paulina Vinter is working in wholesales and has been doing so for several years. She’s wittnesed what the aggressive Black Friday marketing has done to the fashion business for too long and want people to really think about what they are supporting when discount shopping this weekend.

The original Black Friday, i.e. the Friday after Thanksgiving, would historically be a bank holiday in the US and hence a great chance for retailers to bring people to the stores to spend their day shopping. And so it became that large retail chains acknowledged this chance and started to capitalize on stimulating sales this day by offering a one-off, one-day only price mark-downs. Since this strategy worked very well and the word spread, this trend became an imperative for most retailers over the past two decades. By that, it spread towards brands too. And today, consumers are prompted to shop off-price by each newsletter from a retail chain, department store or a brand.

The drastic mark-downs during Black Week are an unnatural phenomenon which, in a large-scale, damages behaviors for producers, brands, small and large retailers and consumers. 

From the consumers perspective, it creates an unnatural crave and urge to the purchases of the often unnecessary, incentived by a discounted price-tag. 

For brands e.g. in the fashion industry, the impact and consequences of discounted selling in general, but particularly during Black week are rather tragic. 

When placing a product out in the market, it is of utmost importance to ensure that it ends up on the shelves (or in e-shops) for the right price at the right time. 

It is often the case, that a brand needs to squeeze its margin (the percentage between production cost and retail price) very tight, particularly if working with partners that market and sell the product for the brand as a part of a wholesale relationship. Hence, selling with a discount inevitably equals cutting from this already tight margin. 

Another effect of discounted selling is that the end customer gets dangerously used to seeing the product for a lower (unnaturally decreased) price, so it’s difficult to make them buy full-price in the future.

When it comes to retail or e-commerce, the effect is similar. The margins of these selling channels are calculated based on a percentage between the purchase price of the product from the brand and end-consumer selling price and are equally strained. If a product is sold with a discount, this margin gets even thinner.

Did you ever wonder why your mailbox is booming so much around this time and it almost feels as if everyone was competing for your attention in order to navigate you towards purchasing that specific item that you saw in a few different places their way? There is a war zone behind the scenes of that. 

It’s a Catch 22, really. One example would be a situation where a brand is trying to do the right thing and decides not to do Black week via their own sales channels but a retailer carrying their stock does. According to EU law, it is not legal to restrict your retailer partners in terms of pricing. As an end consumer, you would logically navigate towards the channel that offers you most lucrative price for the particular product – hence the brand loses the sale for the favor of the retailer. This would often inevitably prompt the brand to offer a Black week mark-down in order to match, or, as much as decrease the marked down price of the retailer in order win the purchase. 

If the situation should be reversed, and a retailer doesn’t offer mark downs however see the brand marking down the product via their own channels, they would most probably also want to match or decrease the price, however not only on that particular brand but on a part or their full assortment from other brands too. And then we’re back to the brand and square one.

In the meantime, the sales records are skyrocketing however sadly, holistic profits are nowhere to be found, as margins were cut too short on the way, plus the customer is hereby aware they should wait with the purchase until products are marked down.

Small companies trying to keep up with the big kids without loosing margins during Black Friday.

There is no good way out of this, other than firmly stopping to participate in Black Week promotions, for all fronts involved.

Happily, there are initiatives already being taken – smaller retailers are boycotting the Black Week promotions by searching for creative ways to turn the end consumer’s thinking. A store Linder Fashion in Dortmund for example runs a campaign, where they charge 10% on top of the original price and donate the additional profit to local shelter for the less privileged during this period of time. 

Brands, both small and well internationally renowned are educating the client on the impact of this activity and simply omit the Black Week sale. 

And as the savvy end consumers become educated on the product’s journey before hitting the shelves, they also appreciate the product in an elevated way and acknowledge the full-price price tag.

Published 28/11/2019

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