Wednesday 21 November 2018 7:08 am

DEBATE: As discounts get out-of-control, is there a case for retailers to ignore Black Friday altogether?

Michelle Ovens CBE is founder of Small Business Britain, the UK’s leading champion of small businesses.
and Duncan Brewer

As discounts get out-of-control, is there a case for retailers to ignore Black Friday altogether?

Michelle Ovens, director of Small Business Saturday, says YES.

Black Friday started off as a day when consumers could enjoy making great purchases, but now it has just become a day for deep discounting – and that is incredibly damaging to small businesses and the high street.

Consumer expectations have now set the day up as a moment for slashing prices, and for small businesses, that make up over 99 per cent of firms in the UK, this just is not a viable option. They can’t compete with the biggest brands, so it might be better not to try.

Small Business Saturday on 1 December is a much more important day. There is less pressure on pricing, and the focus is on local businesses and their contribution to communities, while consumers can make judgements based on service, innovation and value, rather than just price.

If consumers want more choice than just the same big-name brands that dominate retail, it is incredibly important that we support small businesses on this day and throughout the Christmas period – and maybe take a step back from Black Friday this year.

Duncan Brewer, retail and consumer goods partner at Oliver Wyman, says NO.

Since the first big UK retailer started running Black Friday promotions, there has been no way back for the whole sector. Collectively, they are all losing money now: our research shows that 75 per cent of Black Friday purchases are cannibalising full-price sales. But if an individual retailer chooses to ignore Black Friday, its business may lose a huge volume of sales to competitors.

That’s why they all have to stick with it. It’s better to keep sales volumes up (even at minimal profits) and try to win new customers on Black Friday than it is to lose sales to the competition.

Given this dilemma, individual retailers must figure out ways to deliver Black Friday better than their rivals – for example, with leaner operating costs, smarter purchasing decisions, attracting customers with products and shopping experiences they can’t get elsewhere, and high-margin add-on sales.

Black Friday cannot be ignored, so it must be used to create a competitive advantage.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.