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Hacking Black Friday: How Retailers Can Get Ahead by Getting Price Right

A disciplined but creative approach to Black Friday/ Cyber Monday pricing pays off.

This week retailers are busy finalising their plans for the most anticipated shopping weekend of the year. In the UK, the hype around Black Friday & Cyber Monday (BFCM) continues and even those that previously warned about the dangers of price-cutting are preparing to “scale up” their efforts in 2019.


There’s a lot at stake when it comes to pricing for BFCM - discounts disproportionately affect profit and just a 1% change in ticket price can impact your bottom line by 11%. But that means there’s also a huge opportunity to get ahead by getting price right. Careful, data-driven pricing during BFCM can set you up for success during the busiest trading weeks of the year.


Ahead of the big day, we thought we’d share some of our top tips for BFCM, which we've compiled based on our pricing and promotions work with major retailers in the UK and Europe:



1. Keep it simple, but avoid the “everything” offer


Blanket discounts (e.g. “20% off everything”) are the easiest offers to execute, but they are also the most dangerous. When everything is included, sales mix often shifts in the wrong direction - you'll probably sell a lot more of your lowest margin and/or top selling products and a little more of everything else.


It’s well worth the extra effort to develop a variety of offers that are relevant in their own right, but keep plans as simple as possible by sticking to some basic rules:

  • Promote pre-planned special buys significantly, but hold back when it comes to top sellers, flagship products, and in categories where stock is constrained

  • Invest in deep discounts only with a clear strategic objective in mind – like gaining market share, acquiring new customers, encouraging trial of new lines, or building loyalty in high lifetime value categories

  • Where margin is tight, stick to volume based offers

  • Drive urgency and interest with limited time deals



2. Be proactive: use BFCM to tackle impending stock problems early


With all the buzz around BFCM, it’s easy to forget about what comes next: clearance.

Clever retailers will leverage traffic during BFCM to proactively deal with some of their soon-to-be end of season stock problems.


Merchandisers, especially in fashion and seasonal categories, tend to be overly optimistic about sales at this time of year because it's difficult to predict forward demand with backward-looking metrics like cover. But BFCM is a great chance to clear stock, and for your toughest stock challenges, it's an opportunity to avoid discounts of 50% or more in January.


Deciding where to take action is easier said than done. A reliable forward forecast (like the one Sparkbox provides) can give your team an early, reliable view of markdown risks and guidance on how to proceed. In the absence of a solution to help, be realistic, look beyond cover for signs that a stock problem is only growing, and tackle it early with an offer over BFCM.



3. Craft your offers around your customers, not your competitors


It’s important to keep an eye on what the market is up to but be wary of becoming too focused on your competitors, especially if you’re running a fashion or seasonal business. Last year, fewer than 15% of BFCM shoppers had done much research and preparation in advance of the sales, which means retailers can win with creative, compelling offers rather than with the steepest discounts.


Too often we see retailers trying to match or beat market prices on non-identical products during BFCM. Not only does this require a lot of energy – it quickly erodes profitability. Instead:

  • Lead on price with pre-planned special buys which have the margin to support your deepest discounts

  • Match the market on your top key value items and traffic drivers

  • Everywhere else, develop offers that turn attention to value instead of price (for example: free gifts or value-add services, bundles, stacked discounts, vouchers or gift card offers, BOGOs)

Above all, shout about value and remember your competitors may be addressing stock problems you don’t have. Where you can’t support it with both availability and margin, hold your nerve and focus on profitable sales rather than on following the crowd.


For a customised recap of BFCM 2019 to help with planning creative offers next year, sign up here for a free Market Pricing report from Sparkbox.



At Sparkbox, we help our clients optimise prices and maximise profitability during promotions, markdowns, and throughout the season. Our platform uses machine learning to enable data-driven pricing, but we also work closely with merchandising teams to establish best pricing practices. For more on how we could help with your pricing in 2020, visit us at www.sparkbox.co or reach us at info@sparkbox.co.