Worth an enormous £2.5 billion to the UK economy in 2017, Black Friday is – rightfully – seen as an important sales opportunity for retailers across a huge range of consumer sectors.
However, with the UK high street already in dire straits, caused in part by increasingly narrowing profit margins, it’s important that brands do not base entire discounting strategies around the day itself. This is particularly true in the lead-up to the lucrative “Golden Quarter” which should be, in theory, when most retailers make the lion’s share of annual sales.
Indeed, recent research from B&Q – which announced it will not be partaking in Black Friday this year – revealed consumers trust brands which offer steady, year-round low prices far more than those that offer one-off discounts.
This long-term strategy makes far more sense in an era where brand reputation and customer experience are often more important than simply “who offers the lowest price.”
With this in mind, let’s explore how brands can use Black Friday to drive long-term consumer loyalty.
Consistent authenticity is key
Price-cutting can certainly be an effective strategy for some brands. Amazon, for example, a company whose values are synonymous with low-cost items, has always performed well on Black Friday because heavy discounting falls in line with its messaging and business model.
Industry heavyweight IKEA, meanwhile, shunned the event last year, stating that it aims to offer shoppers great prices all year round, so doesn’t need to discount. Both strategies work well for those particular retailers because they are consistent with brand tone.
The important term here is strategy. Many brands can be guilty of buckling under the pressure of the event and offering – sometimes damaging – discounts, rather than thinking about how it fits into their existing sales and marketing approach.
Retailers should always aim to communicate with the customer in an authentic and consistent way. For some, this means offering low prices on Black Friday and for others, it will not. But today’s savvy shoppers are far more likely to respect and be loyal to a brand which stays true to its core message in the long run.
Authenticity will also be crucial as scrutiny around the validity of Black Friday “deals” continues to grow. Many consumers have begun to question the event’s legitimacy, with research showing that 68% believe it is simply a marketing ploy.
If retailers do choose to implement price-cutting, it’s important to ensure that sale items offer a genuine discount; this is far more likely to create a positive customer image and drive people back into store ahead of the Christmas period and beyond.
A flexible payment journey
Black Friday is inherently characterised by blanket price cutting in order to attract customers and drive impulse spend. However, rather than thoughtlessly slashing prices to rock bottom, retailers should instead take a closer look at how to offer customers solutions which actually work for their unique financial situation.
For example, Black Friday 2018 will fall just before payday for many. Giving customers a way to defer payment, or spread the cost of their purchases over a set period of time, can be a great way to increase average basket spend and retain customer loyalty in the long term.
Indeed, our recent research found that 34% of customers would spend more with a brand that offers flexible credit options, with 28% saying they would be more likely to return to a merchant that allowed them to borrow funds in this way.
Sacrificing short-term sales for long-term success
There are a number of reasons why retailers may choose to engage in Black Friday sales events.
However, for many brands, these only offer immediate wins and are often not conducive to success in the long run. Retail businesses should therefore not view Black Friday weekend as a means to drive short-term sales, but rather as a springboard to build positive conversation around the brand and drive customer loyalty for the years to come.
Bruce Rayner is CEO of consumer finance specialist Duologi.