The month of November raises a juicy conversation topic for pro shop retailers. Black Friday. Over £2 billion was spent on Black Friday in 2017 and, if you're an owner manager of a retail business, you wouldn't be blamed for thinking you should get behind it. But is it right for you?
Retailers are divided over Black Friday. One view is that it’s bad for business, and not what customers are looking for. This group would say that most of the prices are fake, and customers know that; Black Friday just moves business from December to November; that it’s not growing the market and, even worse, it can shrink profit margins.
However, the other view is that it increases turnover, and that customers purchase more than they normally would, because they believe they’re getting a good deal. It’s the ultimate upsell.
YOUR BLACK FRIDAY CHECKLIST
Use this checklist to decide whether Black Friday is good for your business:
1 Do you need to increase footfall for November?
Have a look at your figures from previous years, and compare them to the months around it. November is traditionally bigger than October, but smaller than December.
2 Do you have a Stock Turn of less than 2?
Less than 2 is below the national average. It means you have too much stock, so a sale is sometimes a good option.
3 Are you certain you won’t be able to get rid of excess stock before the start of next season?
For some businesses, Christmas is a great time of year to get rid of excess stock, and often at a much higher margin. Perhaps that’s a better solution for you?
4 Do you already have a reasonably healthy margin?
Black Friday can be good to get rid of stock, but usually at the expense of ‘margin’. You’ll often find that, although your turnover will be up, the money in you bank is the same. And now your customer possibly assumes you’re going to reduce items at this time every year.
If you answered Yes to a stock turn of 2, or more, jumping on the Black Friday bandwagon might be for you. But, even then you may want to think about discounts at other times of the year. The main problem with having great deals at the same time of year, every year, is that your customers will remember - meaning you could lose potential sales throughout the rest of the year, in anticipation of your big sale.
Make the most of Black Friday
You’re happy with your answers to the checklist above, now here’s our guide to getting it right on the day.
How do I market Black Friday?
As much as possible! Don’t be shy. You need to ensure EVERYONE knows about your deals. Be brave and spread the word on social media; send emails; produce posters for the shop; use your website; target community websites; or try a small ad in a local newspaper.
How much discount should I give?
It’s essential to let the numbers guide you on this.
You need to weigh up what can you afford to lose, against what it will mean if you still have that stock in your shop this time next year?
One good method is to get some “loss leaders” as headliners. This could be stock that just hasn’t sold for 2-3 years. Promote them up front and then you won’t need to discount your other products so heavily.
Also, think about alternatives to straight % percentage discounts. Bundling is a tried and tested retail technique and can help increase basket size: So, think about a 2 for 1 deal, for example.
What products should be in the sale?
Always start with the worst sellers. Use reports from your ePos to guide you to the products with the most dust. (The Golden Rule is that no item should celebrate a birthday). After that, look at those you can afford to lose a bit of margin on.
Should I purchase stock just for this day?
Not unless you can guarantee to sell the majority of them!
Depending on the type of shop you have, bulk buying at a low price to sell at a low price, can be good business. But it can also be damaging. This strategy can leave you with excess stock, and can also set low price expectations with your customer base.
The simple reporting in XPOS helps you make the best buying decisions for your business. Wave goodbye to excess, or dead, stock and watch your stock turn improve. XPOS gives you the reports you want and the market comparisons you need. To speak to us about what XPOS can do for your business, email firstname.lastname@example.org or visit www.crossovertec.co.uk