Black Friday and the Small Business: A Discussion

I remember being approached by a group buy coupon company in 2009 to offer a “deal” for my business.  It was my first year with a storefront, and I was anxious to please and get exposure. It seemed like a good idea, but upon more research and my legal advisor finding a serious issue with the contract in the fine print, (a clause saying that if the deal did well, they reserved the right to see as many as they wanted and there wasn’t boo I could say), I swore off deep discounts and deals forever, subscribing to the school of thought they cheapened my brand.

As a result, I never became a part of the Black Friday Phenomena.

The was coined in the US in 1951 in the trade journal Factory Management and Maintenance, to refer to the practice of labourers calling in sick before the American Thanksgiving holiday in order to have a four day weekend. From there, use of the phrase spread slowly, first appearing in the New York Times in 1975 to describe the busiest shopping and traffic day of the year in Philadelphia.  However, Black Friday didn’t catch on immediately. It officially become the busiest shopping day of the year in the U.S. in 2003, a position it has maintained ever since.

Canada caught on too as Black Friday became popular with our neighbours.  Many Canadians travelled for the deals until 2008, when the Canadian Dollar vs. the American Dollar no longer made it worthwhile.  Our big box retailers took advantage- starting in 2008 Canada joined the Black Friday game, to discourage consumers from heading down south and take advantage of what was becoming a cult phenomena.

So how does Black Friday affect the small local business?  Is it mob mentality- “can’t-beat-em-so-join-em”? Does it cheapen our brands, bring in the wrong kind of customer and overwork the heart of any small business- it’s employees?

I’ve been chatting with some Ottawa entrepreneur friends this week- four of em- and in the interest of this blog and my brand always supporting and loving the little, local guy- I’m going to leave them all off the record in case there are any negative connotations.

One entrepreneur feels that these two days have killed a lot of small business retail as they rely on year round support from the community and that shoppers will wait to see what’s on sale before holiday spending occurs.  They also feel that this also feeds the misconception that small businesses charge more as they are small.

I took this entrepreneurs thoughts to two others I spoke with to get their opinion.  One rebutted by stating that battling big brands in retail is tricky, but it’s important we keep in mind that they are not the ones taking significant sales from us.  It’s a different demographic who chooses the small local shop over the big brand.  The other said that they were happy to see the dollars coming in their door, not the malls.

My friends inspired me when they stated that they were taking Black Friday and making it their own. Both were making donations to local charities, based on a percentage of the sales for the day- leveraging a day that is usually considered a benchmark of consumer ugliness. One was even giving employees the morning off and handling the shop themselves so the sales team were well rested and ready for the busy day. They were also providing special lunches.  Not too shabby at all, considering that employees and retail workers are usually the ones who take the brunt of the holiday, and make up a large percentage of the 7 who have been killed and the 98 injured in the US on the day since 2005.

Another point that was brought up was the fact that this was a shot for those who may not normally be able to afford products to pop in and buy items at a price they could.  When I questioned whether this actually creation of a long term customer who spends, or just attracting the “deal seekers”, I was reminded that once the item was purchased, loyalty and future purchasing could be created by the consumer seeing the great quality of the item and understanding the justification of price.  I.e. Buying a top at the mall for $5 that falls apart after a year, vs. buying a carefully constructed top for $80 that you’ll have for a decade.  If you don’t ever partake, how can you support?

Furthermore, I was told this is a great chance to move items that haven’t sold.  But are we as business owners making a profit on a rock bottom price?  A costing strategy I learned about in writing this post used by a fast fashion retailer was that they would not even consider a design and costing proposal unless there was still a profit to be made- even when the item was discounted to 75%.  I was fascinated by this strategy, and think it should be applied to certain small business practices.

My personal take on the situation is that it comes down to the business owner.  I’ve always said that business ownership is like parenting- it’s your kid, you call the shots and you know what's best.  Review your profit margins, check your consumer base and decide if Black Friday works for you- financially and business emotionally.  If it doesn’t then don’t partake. Think the holiday is tacky and materialistic?  Then take it and make it your own, like my friends above have.

You can never lose when you’re true to yourself.

Xo M.