Shopping events – are they really worth it for retailers?

Crowd of people shopping

Crowd of people shopping

Black Friday Shopping events – are they really worth it for retailers?

Published on 22.12.2022 by Stephan Lamprecht, journalist

Every year, shoppers head out in search of bargains and discounts: shopping days have established themselves as an integral part of the year. But do shopping and event days still have the same impact as they did a few years ago? Should retailers join in or adopt other approaches? That’s what this article is about.

Amazon organizes its own shopping event, while retail companies in Germany, Austria and Switzerland have been taking up a traditional American event for several years now.

The idea of a special day for grabbing bargains has definitely gone down well with customers. Today, most customers probably know what “Cyberweek”, “Cyber Monday” or “Black Friday” mean. Not least because large retail chains set off a veritable barrage of advertising in the run-up to the event.

Each franc can only be spent once

Successes attract imitators: what Black Friday is to Americans, Singles Day (11 November) is to China. Actually intended as a holiday for single people, Singles Day has become the world’s biggest online shopping event, supported by the gigantic sales that the Alibaba platform announces every year. It is therefore not surprising that the first retailers in Europe also began to declare the event – which was completely unknown in this country – a special sales day.

This has also worked in recent years in that it has given retailers the opportunity to reduce inventory capacity, test customers’ buying appetite for the Christmas season and position themselves as price-conscious suppliers.

As Alibaba reported, the e-commerce giant proudly achieved USD 73 billion in sales on Singles Day this year. An impressive figure, were it not for the small blemish that this was only the same level as the previous year. The success story seems to have suffered its first small dent.

This is because China is also experiencing an economic downturn and people are no longer quite so liberal with their money. In economically uncertain times, euros, yuan and francs are no longer spent so generously.

In this respect, the results of Black Friday or Cyber Week can be expected with particular excitement this year.

There are good reasons not to join in!

In view of forecasts that promise high sales, it seems almost negligent from the point of view of a retail company not to participate in big sales events.

But a critical look at these mega-events has more to do with the fact that, as we know, sales do not automatically mean contribution margins. Circumstances have also changed in recent years:

  • Bargain hunters are not regular customers: one of the biggest problems with sales events is simply that they target groups of customers who are really only looking for the most attractive price. Sustainable growth in the number of customers only occurs in the rarest of cases.
  • High advertising and cost pressure: with the increased popularity of sales events, competitive pressure has increased significantly. This includes a real price battle, in which small and medium-sized retailers in particular lose out with their prices because they cannot reduce their margins any further in order to be competitive. This is also associated with high marketing costs for ad placements on Google or price search engines in order to be noticed at all.
  • Supply chain problems: the crises that have held the global economy in their grip for more than two years can prove to be a real boomerang if there are problems with the procurement of goods due to supply chain issues. Disappointed customers are never good advertising.
  • Critical perception among certain customer groups: critical voices are now an integral part of the coverage of sales events in the popular media. For example, many people are aware that retail companies like to raise prices shortly before events in order to offer a discount that seems all the more attractive. On the other hand, critical voices are increasing among customer groups who are calling for more sustainability and consider discount battles to be unnecessary. In fact, in the fast fashion sector it is hardly comprehensible that the non-discounted prices are supposed to be just enough to pay minimum wages, but then discounts of more than half the price are granted in some cases.

Sales events remain a double-edged affair

If you’re still looking for a way to quickly get rid of excess stock, drastic discounts during Black Friday or other events can get you there fast.

On the other hand, staying away from shopping events does not mean sacrificing seasonal business or giving competitors an unassailable lead.

Sustainable sales and customer relationships can also be achieved with the company’s own seasonal discounts, which then also attract more attention, and with permanently attractive prices and services.

Stephan Lamprecht, journalist

Stephan Lamprecht has been following e-commerce developments in Germany, Austria and Switzerland for two decades as a journalist and consultant.

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