BrainTrust Query: Black Friday Madness - A Strategy for Failure
If the goal of a sale is to bring people in and get them shopping, I have to question the validity of Black Friday sales and quantity allocations. Changes in the retail industry are creating an environment where Black Friday sales are becoming less relevant and can actually create short-term damage to the brand.
Consumers have to scrutinize the deal and savvy customers who understand sales will be the first to pass on these ‘super deals'. I applaud the fact that retailers have recently begun advertising quantities available and have been printing conditions and limitations more clearly on their media. Unfortunately, these disclosures only confirm low availability and strict limits on the deals. The whole purpose of a ‘big sale' is to bring people in the doors. Current Black Friday strategies are flawed and create a hostile retail environment for customers.
The current economic situation has also turned ‘browsers' into ‘cherry pickers' as more customers scrutinize the use of their shopping dollars. This shift in customer behavior can wreak havoc for retailers especially when it comes to Black Friday and other sale execution.
Last season I was working on a project for a major club chain. To remain competitive, they were advertising 42" Sony LCD TVs at an unbelievably low price. On the day of the sale, I noticed the club manager placed the 12 units he had in stock on flatbed carts and parked them right up at the cash registers. I asked him about that and his response was, "We want to make it convenient for the member." So I decided to track the 12 units to see what would happen. Here is a summary:
- At 9 a.m. there were 55 customers waiting for the 12 units.
- At 9:05 a.m. the club was sold out of the 12 units.
- All 12 units went out on their flatbeds at a loss of $400 each.
- Not one of the 12 members purchased anything else.
- Of the 43 that did not get TVs, 29 of them lodged complaints to the club manager.
- Forty of the customers who did not get a TV immediately walked out with no further interactions.
- The three remaining customers browsed the club and walked out with nothing.
So to summarize, this club (which is no longer in business) lost $4800 in the first five minutes of opening. No attempt at additional sales. No merchandising strategy. No way to capitalize on foot traffic in the club. Something as simple as HDMI cables were nowhere to be found. Unfortunately, this scenario echoes many Black Friday attempts at getting people in the door.
Our current economic climate has created shifts in buying habits that retailers must understand and take action on. Black Friday deals that are weak in terms of allocation and model availability will not create the desired results. Merchants looking for increased basket size and return visits will not realize those goals. Instead, you will see Black Friday deals sell out quickly with little or no margin intake and the alienation of the bulk of you customer base. That will lead to medium and long-term image problems for your brand.
Discussion Questions: Do you think Black Friday deals and marketing strategies have become flawed? How has the downturn changed their effectiveness? What should and shouldn't retailers be doing on Black Friday?