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Black Friday lead-up kick-starts holiday sales boom

Overpromising on price, underdelivering with inventory could break customer loyalty
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Shoppers enjoy the holiday-season windows outside Holt Renfrew in Vancouver | Chung Chow

Sales have already started in the lead-up to Black Friday, but instead of fixating on the November 29 date, smart retailers are treating the last six weeks of the year as a marathon that includes a few sprints.

Forethought into how to provide the most value while extracting the most profit is key, as is strategic buying and tactical precision to avoid alienating shoppers by running out of stock.

While slashing prices is popular with consumers, some retailers are unconvinced that it is a winning strategy.

House of Knives co-founder, owner and president Andre Eng, while he was on a panel at the Retail Council of Canada’s recent Retail West conference in Vancouver, appealed for other retailers to reflect on the phenomenon.

“You would never see the hotels give half-price discounts during conventions and conferences,” Eng said.

“For some reason, in retail, it’s like, ‘Here’s our harvest time, let’s cut our margins even more and give away more margin pre-Christmas than post-Christmas.’ I’m OK with doing it post-Christmas, for Boxing Week, but pre-Christmas? Who’s the idiot who thought up that?”

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(Image: House of Knives owner Andre Eng at his store at Park Royal | Rob Kruyt)

Eng told Business in Vancouver afterward that in addition to seasonal discounts, he tries to add value in transactions by providing gifts with purchases. Knives may be sold bundled with a free cut-resistant glove or a sharpener.

“Anyone can take a product and just lower the price on it,” he said. “We try to leverage our strengths, and one of our strengths is that we have become vertically integrated so we have factories making products for us now. We can offer great value by bundling branded products, which we have heavy competition on, with [our own products].”

John Fanous, Google Canada’s senior business lead for retail and shopper marketing, advises retailers to look at the entire season as one filled with increased consumer demand, and then to tweak offerings to scale up for events such as Black Friday.

“We tend to focus so much on Black Friday, Cyber Monday and Boxing Week, but the reality is that if we do a good job throughout the entire holiday season, the ability to pace up on those key dates becomes even more practical, even more efficient and, dare I say, more profitable,” he said.

Retail analyst and DIG360 owner David Gray told BIV that Boxing Day remains a bigger shopping day in Canada than Black Friday and that Black Friday sales have “plateaued,” with slightly more than half of Canadians either buying or browsing sales promotions on that day.

London Drugs COO Clint Mahlman said his chain of general merchandise stores generates more revenue on December 23 than on any other day. Revenue per hour is highest on the shortened Christmas Eve shopping day; peak sales also occur on Black Friday and during Boxing Week.

Staying in contact with multinational electronics retailers and others after Black Friday is one of Mahlman’s strategies. If one of those retailers has had a bad Black Friday, Mahlman said, it will likely have excess inventory and may offer extra-sweet deals to a retailer ordering large quantities of an item.

“That gives us a huge price advantage that we can then offer on Boxing Week, or prior to Christmas.” Mahlman added that having extra inventory is key for London Drugs.

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(Image: London Drugs COO Clint Mahlman walks down an aisle of one of his stores in Richmond | Dominic Schaefer / BIV Files) 

He said he has heard customers at other stores gripe about finding shelves empty after being lured by bargains in flyers.

That kind of misleading marketing breaks customer loyalty and could have long-term consequences, he explained.

“We want a customer for life, not just for Black Friday weekend,” Mahlman said.

To best determine London Drugs pricing, one strategy Mahlman uses is to watch competitors like a hawk.

“We are creatures of habit,” he said. “From a competitive perspective, it’s really easy to knock off other retailers, especially since, in this day and age, we leave digital footprints.”

Competitors, he said, tend to replicate similar flyers each year, and it is relatively easy for him to deduce that they will probably have similar sales on similar items this year at or below the price that they had last year.

“From a competitive intelligence [standpoint], there’s a huge amount of activity going on in London Drugs right now verifying prices,” he said.

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@GlenKorstrom