PRICING NEWS
Black Friday and Black Week: Strategic Pricing Insights
by Prof. Dr. Hans-Christian Riekhof
The discount battle of the year: Where do Black Friday and Black Week come from?
The Black Friday has its roots in the USA and traditionally takes place on the Friday after Thanksgiving. Since the 1950s, this day has marked the beginning of the Christmas shopping season. In the 2000s, Black Friday also became known outside the USA, mainly due to the globalization of online trade.
Black Friday: Sales boost through aggressive pricing.
Source: © iStockphoto
In Germany, Black Friday gained importance more than 10 years ago when large retailers implemented corresponding discount campaigns. In the UK, Black Friday became popular around 2010, particularly through US companies like Amazon.
While Black Friday is known in some Asian countries, in China the Singles’ Day on November 11, introduced by Alibaba, dominates and is now the world’s largest online shopping event.
The term Black Friday originated in the 1960s in Philadelphia, USA, where the police referred to the day after Thanksgiving as “Black Friday” due to increased traffic and crowds. Later, the term was positively occupied by retailers to market the day as the start of the Christmas season.
Black Friday: Sales boost through aggressive pricing
The sales on Black Friday are impressive worldwide. In the USA, online sales of over 9 billion US dollars are achieved, in Germany the sales in 2022 were about around 5 billion euros during the Black Week, including Black Friday and Cyber Monday, as reported by the HDE.
The average discounts vary depending on the industry and product category, but often range between 20% and 50%. Some retailers even offer discounts of up to 80% to attract customers and reduce inventory. In the USA, large retailers like Amazon, Walmart and Best Buy dominate Black Friday, in Europe it is also retailers like MediaMarkt, Saturn and Carrefour.
Aggressive pricing on Black Friday: Sales push through deferred sales?
Before Black Friday, retailers often record a sales decline of up to 30% as consumers wait for the discounts. After Black Friday, sales normalize. However, overall, November can record a sales increase due to these events.
Bitkom studies show that about 60% of sales on Black Friday are considered advanced sales, where customers shift purchases they would have made anyway to this day. Only about 40% can be considered as truly additional sales, generated by impulse purchases and attractive offers. These figures underline the effect of a very “loud” price communication: many customers now have a pronounced bargain mentality.
Electronic items often achieve the highest individual sales on Black Friday. For example, it is reported that the sale of the PlayStation 5 on Black Friday 2022 generated worldwide sales of over 800 million US dollars. Such top sellers contribute significantly to the overall success of the day and are a central part of the sales strategy.
The most popular product groups are
- Electronics such as smartphones, TVs and laptops
- Fashion, i.e. clothing, shoes and accessories
- Household appliances such as kitchen appliances or vacuum cleaners
- Toys, which are in high demand especially before Christmas
- Cosmetics and perfume.
Black Friday discount battle: The perception of scarcity and exclusivity is consciously promoted.
Image credit: © iStockphoto
Escaping price comparison: Some products and offers are made especially for Black Friday
While exact figures are hard to determine, many companies use Black Friday to market special product lines or limited offers. According to a GfK study, an estimated 10% to 20% of the offers are created specifically for this occasion. Exclusive deals are offered, and at the same time, the perception of scarcity and exclusivity is promoted.
How many customers shop in Germany on Black Friday?
According to a BEVH study, in 2022 about 62% of German consumers participated in Black Friday shopping, which corresponds to about 51 million people. This high participation shows the reach of the event in the German market and the necessity for large retailers to be there. However, the return rate on Black Friday is higher than on ordinary days and can reach up to 45% depending on the product group, especially in the fashion sector.
Are the high discounts a real price reduction?
There are few studies that observe the price development of a specific shopping basket or specific products in the run-up to and during the Black Friday period. However, we know from conversations with retail experts that some retailers have increased the prices of the items significantly reduced on Black Friday in advance in order to be able to grant particularly high discounts.
Consumer tip: Watch the prices closely in advance
Consumers will only notice this in individual cases, for example if they create a wish list of their sought-after products and follow the price development on an online price comparison portal. However, this is an important recommendation for the enlightened consumer: the supposedly high discounts should always be critically viewed and questioned – not all retailers play with open cards.
Price activism on Black Friday and Black Week: Logistical challenges and continuous optimizations
Black Friday and Black Week are more than just sales events – they require a complex interplay of marketing, pricing strategy and logistics. Companies that master the interplay of these factors can not only increase their sales in the short term, but also increase their awareness, improve their price image and win new customers. Given the high return rates and technical challenges, it is crucial that retailers continuously optimize their strategies and adapt them to market conditions. This can also mean selecting the offers more strongly in the following year in order to keep return rates and subsequent costs under control. Black Friday and Black Week should therefore become a permanent learning process. Best regards, Prof. Hans-Christian Riekhof
