Novembre 11, 2024
Another black friday is nearly upon us, soon our email inboxes will be bombarded with deals not to mention the plethora of ads on social media and the web.
The Black Friday and Cyber Monday promotions have gradually taken over in the last 10 years. In this article I will discuss how this American tradition spread across the globe in both physical and digital retail, and how it has affected the cycling industry.
How we Got Here
Origins of Black Friday: Black Friday originated in the 1980s in the United States and it represents the first day of the holiday shopping season. The origin of the term comes from the idea that it’s the day retail stores went from being “in the red” (losing money) to “in the black” (profitable). Black Friday always lands on the Friday after Thanksgiving and since most working people are at home for the holiday, retailers began promoting the day to capture the mass of holiday shoppers at home and looking for deals.
Evolution: Black Friday gained popularity throughout the 90s and into the 2000s, when it migrated online with the Cyber Monday event which was first seen in 2005. Cyber Monday is the first day back at the office after the Holiday when working people could do their Christmas shopping online in the office.
Turbocharged by covid: The COVID pandemic saw nearly all brands shift to online selling due to lockdowns and shifting customer habits. As Black Friday marks the traditional start of the Christmas shopping season and is an essential part of Ecommerce revenue strategy, naturally cycling brands have fallen into line and adopted the annual promotion.
Impact on Brand Perception: The most delicate topic around Black Friday is its impact on brand value and overall perception in the marketplace. While the focus on revenue is the top priority of any commercial enterprise, what is the true cost of this type of promotion and discounting?
Value Perception: Regular pricing becomes less credible when deep discounts are offered and therefore customers may delay purchases. In the expectation of upcoming sales. Discounting creates doubt about true product value and you run the risk of training customers to never pay full price.
Premium Brand Challenges: Luxury/premium brands risk diluting their exclusivity when engaging in discounting and promotions. A real conflict exists between maintaining prestige and meeting market expectations. To put it bluntly, discounting is a form of brand destruction that damages carefully cultivated premium positioning.
Long-term Effects: Once brands begin with discounting it can become a slippery slope, with the need for increasingly deeper discounts to attract attention. Inadvertently brands instil a customer expectation of regular sales cycles leading to the potential erosion of brand equity and the challenge in returning to full-price selling.
Dealer Revolt: Most dealers, justifiably or not, view Black Friday promos as direct competition with their business. Some have dropped brands that heavily discount online due to frustration over competing with their own suppliers citing unfair price competition. When brands discount, dealers are forced to match online prices to remain competitive while suffering reduced profitability on key products. Brands also have difficulty maintaining stock levels when competing with brand warehouses.
Category erosion: High-margin categories like clothing and shoes have been particularly affected in the dealer space due to aggressive online promo activity by brands and large online players. This has reduced the ability of stores to stock premium products and led to a shift towards a more service-focused business model.
Adaptation Strategies and Long-term Business Changes: Dealers have been forced to shift their focus to a premium in-store experience and personal service. At the same time dealers are increasingly choosing brands with strong dealer protection policies. Bike shops are also putting greater emphasis on used bike sales and service while developing in-house brands for the most promo heavy categories.
Who is to blame? The proliferation of online Black Friday sales stems from a perfect storm of multiple factors working together. E-commerce giants like Amazon led the charge with aggressive pricing and artificial urgency, while traditional retailers were forced to follow suit to remain competitive. Consumers eagerly embraced online shopping convenience and demonstrated a willingness to wait for deals. Technology enabled easy price comparison and viral deal sharing, while economic factors like the 2008 recession created discount-seeking behaviors. The marketing industry amplified these trends through sophisticated campaigns and FOMO messaging, creating a self-reinforcing cycle that normalized year-round discounting.
Best Practices: I am not totally against the promos like Black Friday, as long as they are managed correctly, everyone can benefit. Here are some best practices that brands should follow to ensure a healthy Black Friday promo:
While Black Friday has become an unavoidable part of the retail calendar, its implementation doesn’t have to be destructive to brand value or dealer relationships. The key lies in finding the right balance between meeting consumer expectations for holiday deals while protecting long-term business interests. By following best practices like transparent communication with dealers, strategic discount planning, and territorial respect, brands can participate in Black Friday promotions without sacrificing their premium positioning or alienating their brick-and-mortar partners. As we move forward, the success of Black Friday will depend not on who can offer the deepest discounts, but on who can create sustainable promotional strategies that benefit all stakeholders in the retail ecosystem.
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