The Best Black Friday Discount Strategy Is Not Having One

Many businesses don’t offer Black Friday deals. Their reasons are often more practical than you think.

Written by Hal Koss
Published on Nov. 18, 2021
The Best Black Friday Discount Strategy Is Not Having One
Image: Shutterstock / Built In

Brands feel pressure to participate in Black Friday. After all, consumers have come to expect discounts this time of year. They’ll line up around the block and camp out overnight waiting for stores to open. Some even resort to violence to get the best deals they can. And if one retailer doesn’t offer slashed prices, customers will simply go down the street to shop at the competitor that does.

That’s the logic animating the ever-expanding holiday promotion season, which seems to begin earlier and earlier each year. Once thought of as a salve for retailers — a time when the sudden uptick in sales boosts their bottom lines from “the red” into “the black” — the tradition has become a race to the bottom, with ever-decreasing prices threatening the sustainability of businesses.

That’s why, for many brands, the best Black Friday sales strategy is to ditch the tradition altogether.

Why Some Brands Don’t Offer Black Friday Deals

  • Cuts into margins.
  • Goes against brand values.
  • Erodes brand equity.
  • Attracts disloyal customers.
  • Alienates loyal customers.

 

Some Brands Have Already Taken a Stand Against Black Friday

Resisting the temptation to run Black Friday sales isn’t theoretical. Some brands have already done it.

This resistance has come in waves, according to Peter Fader, a marketing professor at the Wharton School of the University of Pennsylvania.

The first wave was ushered in by mission-driven outdoor apparel brands like REI and Patagonia. They knew that playing by all the rules of Black Friday — a tradition whose emphasis on overproduction and overconsumption hurts the environment and retail workers — chafes against their identities as sustainability-focused brands.

On Black Friday in 2011, Patagonia ran a full-page advertisement in the New York Times urging readers to “Don’t buy this jacket.” The campaign drove awareness to the waste problems wrought by the apparel industry. In 2016, the company gave all its Black Friday proceeds to charity.

And since 2015, REI has kept all its locations closed on Black Friday, while still paying its workers. The #OptOutside campaign, as REI calls it, is driven by the company’s desire to inspire its employees, customers and broader society “to celebrate the power of time outside and reject the mass consumption and stress that comes with Black Friday.”

While these retailers lost out on Black Friday revenue, the thinking goes that the decisions helped to fortify their brand images in the long run. (Say nothing of the resulting earned media coverage.)

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The second wave came with other companies that “jumped on the bandwagon,” Fader said, “hoping to capture some of that magic.”

Allbirds, the direct-to-consumer apparel brand known for its wool sneakers, flipped the script last Black Friday when it raised prices on all its items by one dollar, donating the extra proceeds to Greta Thunberg’s climate activism movement.

Minimalist apparel brand Everlane has experimented with similar non-discount Black Friday promotions before too. As part of its annual Black Friday Fund, it once donated $13 for every order placed so it could fund beach cleanups and counteract the 13 million tons of plastic waste entering the oceans each year.

Even some big-box retailers have joined the resistance. T.J. Maxx, Marshalls and HomeGoods don’t run storewide Black Friday discounts. And in a time when more and more stores open on Thanksgiving day, they resolved to stay closed until Friday, declaring “family time comes first” in a splashy 2015 TV spot.

Fader is heartened to see more brands foregoing all the usual trappings of the holiday promotion season. But he’s still holding out for a third wave to roll in, one in which companies don’t feel the need to call attention to their efforts. In his estimation, Black Friday is not just something to resist for PR purposes, but “it’s actually not very good business.”

ReadConscious Consumerism, Explained

 

Why Brands Shouldn’t Participate in Black Friday

Aside from appealing to nobler motives — which does, in fact, move the needle for many shoppers — there are many reasons brands may want to eschew the tradition of offering steep holiday discounts.

 

Cuts Into Margins

Running steeper and steeper discounts reduces the amount of profit margin businesses can make on each item sold. To make up for it, they rely on increasing the volume of sales. That, in turn, often requires hiring more employees, which can hurt the bottom line even more. (Some retailers protect their margins by pricing discounts into the goods they sell. But this ploy may backfire with savvy consumers.)

 

Goes Against Brand Values

For businesses that make ethical production and sustainability part of their brand story, emphasize an employee-first culture, or are positioned as a premium or luxury brand, running holiday discounts might send a dissonant message to customers. To participate in the tradition just because competitors are doing it signals a lack of commitment to the brand’s values and overall narrative, which may negatively impact goodwill with both customers and employees.

 

Erodes Brand Equity

There’s a tradeoff when it comes to running deep or frequent sales. In the short term, it helps improve revenue. In the long term, though, it often dilutes brand equity, the intangible associations that make a brand worth more than the sum of its parts. By offering promotions every Black Friday, brands inadvertently train customers to believe their products aren’t worth paying full price the rest of the year. (Everlane creatively offloads excess inventory without running sales — and thus affecting brand equity — by running choose-what-you-pay promotions.)

 

Attracts Disloyal Customers

Black Friday discounts attract customers who make purchases based on the deals that brands offer, not the differentiators that brands have. “The problem for a lot of companies is all those people rushing in for this doorbuster sale are these low-value, cherry-picking customers who haven’t been around since last Black Friday and won’t be around for the next one,” Fader said. These bargain hunters may not be as likely to make repeat purchases or generate word-of-mouth marketing for the brand.

 

Alienates Loyal Customers

Lots of retailers offer special deals to first-time customers. It’s an effective tactic for getting hesitant shoppers over the line. But it’s one that risks alienating a more valuable segment — the shoppers who have purchased from them before. One 2018 study showed that two-thirds of 1,000 respondents said they would be annoyed if their favorite brand did not offer them the same discounts as first-time customers. Brands that do this are “catering to the wrong folks,” Fader said. And in so doing, they’re “not really adding a lot of long-term value.”

ReadTips for Revamping Your Customers’ E-Commerce Experience

 

What Brands Should Do Instead of Running Black Friday Sales

Just because Black Friday discounts don’t align with what brands stand for doesn’t mean they have to stay quiet during the run-up to the holidays. Here’s how to be strategic about it.

 

Reward and Delight Your Best Customers

Instead of pouring energy into a promotion that attracts new customers who are just looking for the best deals, brands benefit more from focusing on their best customers who already shop from them. By investing in these customers, brands reap the rewards of their loyalty all year long.

In other words, brands shouldn’t make a thing of Black Friday.

“[But] if we are going to focus on that day,” Fader said, “let’s turn the tables and use it as a way to reward our best customers.”

For example, instead of offering discounts and having shoppers line up outside stores at midnight — where it’s first-come, first-served — brands can hold special hours, offer premium services or reserve scarce items for existing customers. And in e-commerce contexts, they can offer existing customers free shipping or add free gifts with every purchase.

“That’s the way to create, enhance and leverage long-term lifetime value,” Fader said.

 

Have a Disruption Strategy

Some brands, like Apple and Tiffany’s, never offer sales any time of the year, as part of their overall strategy. So they can’t really participate in Black Friday’s discount culture. Even so, they may want to consider a disruptive strategy that grabs people’s attention.

“What everyone needs to do is come up with an original approach that fits with what they’re about and how they can ultimately create value for [their] customer,” said Anne Oudersluys, who served as a brand manager at Procter & Gamble before starting Core Impact, a social impact brand consultancy. “It doesn’t have to be a discount. There are so many other ways that you could do that.”

It just depends on what the brand’s ethos is, and what makes most sense for how they can best show up.

It could be a counterintuitive promotion, like Allbirds’ decision to raise prices for charity or REI’s #OptOutside campaign. Anything that differentiates the brand and sets it apart in the minds of consumers — because without a discount, the price tag certainly won’t.

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