world activity surrounding black Friday it has never been stronger. In the US, more than 53% of consumers plan to make a purchase on Black Friday; in the UK, consumers are expected to spend £8.71bn over Black Friday weekend 2022. It is an event that represents a great opportunity to increase customer numbers, build goodwill and generate future sales , but it also threatens to do the opposite if retailers don’t find the right formula.
Real and tangible agreements must come first. Consumers, operating on a tighter budget in a tough economic climate, look to Black Friday for the absolute best price. This means that an insincere offer can lead to disappointment, especially in a purchase made during the heady bragging of a hype-driven event, and damage a retailer’s reputation as a result.
The power of the perfect price
What recent? The article revealed that only 1 in 20 Black Friday deals represented a genuine discount compared to the price of items at other times of the year. Savvy consumers can and do follow brand prices. But cutting prices too much will negatively impact an already difficult bottom line. Finding a balance is crucial, especially when retailers must also work within the rules.
Pricing regulations affect how discounts can be marketed. The optimal Black Friday lineup is one where as many items as possible have previously had a set price and can advertise their discounts. This is often difficult and time consuming to track, and the price cut on Black Friday can have a knock-on effect by following the same advertising restrictions on Christmas and New Year sales.
marketing means money
Selecting which true value items (or even clearance stock) to promote during what is an extremely time-limited event is critical both to generate enough attention and to avoid missing out on future longer sales opportunities. Discounts must also be made with knowledge of their effect on other main lines; it doesn’t make sense to cannibalize future sales of high-margin items in order to attract low-margin traffic one weekend. Suppliers can often be persuaded to create custom product SKUs to help provide lower-priced, limited-time options without devaluing key product lines, but consumers looking for a specific item may not be swayed and, in fact, they may consider marketing features. -Products discounted as dishonest.
And then there is communication. The existence of Black Friday alone is rarely enough to convince a customer to make a purchase, and the tactic of slowly revealing sales theatrically can only work for certain retailers in certain markets. Getting Black Friday marketing right is overkill: consumers need to be excited and feel a sense of urgency. They need to know in advance what deals to expect and why it’s vital that they make a purchase as soon as the price drops. Sale-savvy customers need time to do their research and make sure a retailer is actually offering a great deal.
Internal communication is also essential. Last minute changes can be very disruptive, poorly planned deals from one department can affect another, bugs or forecast errors can cause a chain of problems. All businesses need to approach a time like Black Friday as a united entity, something that is not always easy to achieve.
planning makes perfect
Successfully navigating Black Friday means putting impeccable plans in place, not just for that day, but also taking into account other sales periods throughout the year. It means having enough stock, pricing appropriately, communicating plans with suppliers and partners, and considering other lines. Retailers need to know which margins they can successfully dilute, which ones should be left at that, and exactly what their customers’ likely expectations are. This can be a huge logistical challenge and puts incredible pressure on all departments. but there is a solution.
Smart merchandising (also known as algorithmic retail) employs centralized data management tools and artificial intelligence to help manage ranges, plan promotions, and most importantly, generate accurate forecasts of promotion sales performance and impact. on other lines.
Consolidating each data point means that retailers get one version of the truth. This can be broad, covering every location and line, or extremely granular, allowing analysis to drill down to individual transactions or sales per minute. Applying algorithmic models to the data creates the potential for advanced planning and logistics that can help align products and prices for each key discount period without the risk of spoiling future sales potential or breaking price regulations.
The power of data
With access to historical data, retailers can look back with confidence, knowing precisely what price an item sold for in the past without having to pore over scattered spreadsheets. Generating genuine sale prices not just for key products, but entire lines of thousands of products, is entirely possible – smart merchandising tools help highlight the impact each discount will have on every aspect of a business. Data-driven decisions are secure by design.
Clear data and algorithmic models also make it easy to plan ahead. Internal and external communications can be aligned early and accurately, all while maintaining tight stock control. On the contrary, good data means that retailers can afford to act without advance planning: access to AI models enables quick and reactive discounting that can increase the impact of sales and events or destock effectively. . Making a change in the event loses its risk when it’s easy to fully assess the future impact of a discount on the fly and see exactly how the lines behave as it happens.
Making a rapid digital transformation is crucial for all retailers because strong data management is the path to profitability. Embracing the latest technology and the smart, custom software that powers it is the key to generating truly incremental sales. Algorithmic data eliminates the need for forensic analysis of the books. It smoothens all processes, from the supply chain to the production floor, and offers a strong pain reliever against potential pain points like Black Friday.
Edward Betts, Managing Director Retail Lead Europe, Retail Express
Ed has worked on the Retail sale industry for over 20 years and joined Retail Express in 2019 where he is General Manager UK & Ireland. Ed has extensive and specialist knowledge of retail category management, pricing and purchasing requirements, having worked with a number of UK retailers, including 8 years at Asda where he developed and launched an independent online wine service. Following this, he worked for Distell, a large international drinks manufacturer, where he managed strategic accounts at several of the UK’s leading supermarkets, including Morrison, Asda and Marks & Spencer. Ed is also a Principal Consultant for Retail Express, helping customers make more effective use of products and services, as well as consulting on effective pricing and category management.
About Retail Express
Retail Express is a leading provider of merchandising solutions and services to retail, wholesale and consumer packaged goods (CPG) manufacturers. He uses his deep industry knowledge and experience to deliver business solutions that meet the changing needs of merchandising and category management departments, leading to increased productivity and better financial results. Through its comprehensive AI-powered Intelligent Merchandising™ solution, Retail Express addresses the complex issues of advertising, marketing, promotions and pricing in retail, delivering one version of the truth across the organization and departments. Retail Express operates from leedsUK, throughout Europe, North America and Australia. www.retailexpress.com.