Blog: The Downside of Black Friday and Other Price Competition | Strategic Pricing Solutions
Black Friday was disappointing for retailers this year. Sales were down 11% from last year, ‘Black Friday’ Fades as Weekend Retail Sales Sink, and I expect the retailers to report lower margins when they report earnings in the coming months. This follows a constant bombardment of email boxes and television ads announcing early sales and deeper discounts. Perhaps shoppers just decided that lower prices just were not worth the madness of dealing with the Thanksgiving weekend crowds. These results are a good reminder that relying on price competition can be hazardous, whether you are selling to consumers or other businesses.
We have seen this story repeat itself over the past several years. Retailers have gotten very aggressive in offering deals with very deep discounts and more hours when the discounts are available. Other retailers follow suit and soon everybody is slashing prices to compete for the holiday shoppers, and prices end up not being a differentiator. The media then reports huge crowds and long lines of shoppers looking for certain low-priced merchandise. Discounts then continue throughout the holiday season. Soon after the holidays we see reports that the holiday sales and margins were disappointing.
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