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Importance of Black Friday for Retailers

During the holidays, people often feel like spending more, especially on food or gifts for others. The summer brings Fourth of July sales in vacations, groceries and celebratory decorations while Valentine’s Day brings an increase in restaurant, floral and chocolate sales. However, the largest spending season is the time between Black Friday and the last weekend before Christmas.

Discounts tend to be higher during this four-week period, and, as the major holidays include large amounts of gift giving, people love to act on shopping deals. Small business owners can take huge advantage of these holidays, but for now, we’ll focus on Black Friday.

Economics of holidays

There is a significant effect of time of the year on the sales and revenues of retail businesses because the demand varies tremendously during the times of holidays, like Christmas. For example, families make effort to decorate their homes in order to prepare for the festival – hence the decoration items become highly demanded. During holidays like Christmas, there is often a lot of family and friends gathering which means that the purchase of food items increases significantly as well.

In other holiday seasons, some families plan trips to nearby areas. This gives rise to the demand of an entirely different set of items, like transportation, dining and lodging costs. Retailers witness an extremely busy season every time there are holidays, majorly because the people try to maximize the pleasure of the vacations or holidays.

During the winter holidays, retail businesses see increases in sales and revenue. The holidays, like Christmas and Hannukkah, are large gift-giving ones, which lifts people’s shopping moods. The majority of spending during this time is on items oriented toward others. What’s more, there is a considerable increase in the sale of power wheels for kids and electronic items like appliances, like televisions or ovens, as well as mechanical items, like lawn mowers or leaf blowers.

Black Friday

Black Friday is the fourth Friday of November and is considered as the beginning of the shopping season that ends the last weekend before Christmas. In many countries around the world, Black Friday is considered a public holiday in order to encourage the people to go to their local stores and make large purchases.

However, one of the most notable aspects of Black Friday is that the products are sold at significant discounts. This goes against the normal law of economy, which suggests that an increase of prices should follow the increase of demands. You can see this on various sites that list the top Black Friday items sold on Amazon.

If you’re unsure about participating on Black Friday, check out these benefits.

  1. Getting rid of old stock.

The most important benefit that Black Friday offers to the retailers is that they can sell inventory that hasn’t been sold (and that’s taking up storage space). These are usually the items that previously failed to make a market. Because the Black Friday trend is to spend, spend, spend, these products might perform better than they did previously.

Retailers often keep a margin of profit on products they sell in order to alleviate risks (shoplifting, fire, etc.) and to cover general operating expenses (revenue, rent, etc.). This can lead to a surplus of certain products, which can be then discounted in order to encourage more sales on said product.

  1. Cash flow increases.

Sometimes, retailers might experience cash flow lulls due to pending credit charges or decreases in offline and online traffic. Black Friday is preceded by Thanksgiving, which is also a public holiday in the U.S. The time off allows consumers to relax, which puts them in a better spending mood. Black Friday is also proceeded by Small Business Saturday and Cyber Monday, pushing them into spending more throughout the weekend. The more purchases consumers make to local businesses, the more money they pour into their local economy.

  1. Improves flow of customers.

Black Friday can leave a lasting effect on retail businesses throughout the rest of the year as well. When customers visit a retail store and experience it positively, they’re likely to return in the future. This increases future revenue and cash flow for the small retail businesses as well as gives them an opportunity to test their abilities to manage high sales volumes. Small retailers can also test selling all-year trending items and potentially make a fortune through liaison with the manufacturers or local vendors.

With discounts at their highest peak, consumers can take full advantage of the gift-giving season. As a retail small business owner, you need to understand just how much Black Friday can affect your retail business for the holidays as well as the rest of the year. The more discounts, the more likely people will make larger purchases at your store. Make sure you have prepared, both financially and organizationally, to have the best Black Friday your store has seen.

Chloe Robinson is the co-founder of Top9rated, one of the largest product review websites and marketing consultants online. She has helped thousands of consumers make the right buying choice, before spending their hard earned cash. The review team she manages, work hard to bring their readers the very best reviews available online. 

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