Black Friday and the dangers of heavy handed discounting

Black Friday and the dangers of heavy handed discounting

A multitude of stores are planning on cashing in on the Black Friday and Cyber Monday hype by launching their sales early. Retailers such as John Lewis have already slashed their prices.

Discounting does not always have a positive impact on retailers. Research by online payment provider Klarna found that 53 per cent of the retailers surveyed say that sales are having an adverse effect on their profits, with 11 per cent revealing that discounting cost them over 25,000 pounds throughout 2017. Also important to note that 63 per cent of customers don't return to a retailer after purchasing an item discounted during Black Friday or Cyber Monday.

Pini Yakuel, CEO of Optimove comments: “Once discount period ends, the customers attracted by them will stop coming. We have found that shoppers who make their first purchase from a brand over the discounting season are 19 percent less likely to return to make a second purchase, rather than someone who buys at any other time in the year. If a business wanted to tap into Black Friday and Cyber Monday trend, discounting must be used in a strategic way to start and maintain an ongoing relationship with the customer.”

“Black Friday is rightfully seen as a critical moment to generate revenue and kick off the holiday trading season, however retailers should retain a long-term mind-set when devising their discounting strategy, and use a data driven approach to foster long term relationships with their new customers.”

Posted: 21 November 2018

 
 
Rodney Holman
Primary Sport Management Ltd
Rodney Holman
Primary Sport Management Ltd