Small companies often cut their prices to compete with big ones for customers’ attention, but this can cost money – and many predict losses
When I went to buy a Christmas wreath on Black Friday, there was a significant discount. No, it wasn’t the most important thing in the world, but it was a sale at a good price. It was a small item, but it stood out for how good its price was. A 10% discount made it worthwhile. It was obvious what the bargain was, so I leapt at it.
Black Friday is a commercial activity: the time in the US where the American shopping season ends with a week-long blitz of sales. It was an American phenomenon, then took hold internationally, resulting in a week-long holiday (or “Holiday” in the US) called Black Friday. A bit of recent research indicates that, in the UK at least, it’s become as predictable as the Holidays.
The best deals often come from places that are not necessarily people’s best suppliers. The most progressive retail industry today is e-commerce. But most retailers today don’t do full-scale e-commerce. They just have an online store. And what they have is very different from that of most companies of past generations.
In particular, today’s large online retailers cut their prices to compete with bigger competitors. But this is not as cost-effective as it sounds. The industry that my new business, TuffTextiles.co.uk, operates in is the less experienced area of fibre-based textiles: non-wovens, legions, cut-to-measure and innovative yarns. When the interest rates get into double figures, those small loans become too expensive and you have to fall back on the more expensive options.
For small businesses and individuals that want to make a profit, the main focus should be on profitability. Larger businesses understand this. It is more difficult for small companies. The large retailers cut their prices not because they need to reduce their costs, but because they want to sell more. It is not just about losses on goods, but selling so much more than they would otherwise sell that profits are suddenly higher.
To survive Black Friday, I would recommend paying attention to your customer. What they want, what they value, what they value less, and what they value less. And I would, as I always do, keep a very close eye on turnover and pay-outs. Stay true to your customer. And try to improve. A poor Black Friday may mean that the one after that one was actually a great Black Friday.