The Blackest friday: Consequences for consumers to the industry chase of short term sales.
Black Friday is the first Friday after Thanksgiving. Traditionally, American businesses take the opportunity to offer great discounts to their customers in anticipation of Christmas shopping. This concept that appeared in the United States in the early 1950s has become popular in the rest of the world for only a little more than 15 years. And its effects have been disastrous for the distribution of consumer products.
Indeed, the popularization of Black Friday, like all commercial phenomena, was initially good for the daring who began to apply it. Of course, it gave them a competitive advantage over the other more conservative “players” on the market. Less margin but more market share. They attracted new customers to their competition, offering them more aggressive prices, and they continued to enjoy their full price sales during the Christmas season.
Then what happened?
When the most conservative observed that they had lost part of their clientele, they began to participate in Black Friday, the practice became widespread and consumers got used to it. Yes, yes, they got used to buying their Christmas gifts during the dates of Black Friday, which went from being one day to becoming a “Black Week”. In fact, the race is now to find out who will start with their discounts first.
If we take a little perspective and look at the impact of Black Friday on an annual basis, we realize that the margin structure of the distribution has totally changed.
To show it in a simple way, we will say that 20 years ago the stores sold with 100% of their margin for 10 months a year and had two months (1 in winter and another in summer) of discounts. These discounts allowed them to liquidate the unsold they had to allow him to start the next season almost cleanly.
20 years later, price competition and promotional marketing concept inventions or imports have turned the calculation of average margins into a true science.
First you start with a pre-campaign sale, for consumers who want to set a trend and do not care about the price for this. This sale is made with the full margin, and from there, innumerable promotions are happening that are so many excuses to explain to the client that an exceptional discount is being made and that they should take advantage of this opportunity if they want to consider themselves as a smart buyer (Smart buyer). Mid season sales, black Friday, cyber Monday, end of season sales, etc, etc, etc …
What consequences on the product we buy?
In a free market, for companies to continue operating, they have to earn money and therefore have a minimum margin to stay alive. The constant drop in margin generated by the price war, the repetition of promotional activities, the increasing weight of sales made in outlets, etc … has forced most consumer brands, even the best ones, to get more margin from your purchases. The consequence would have been to change the places of production, if most of them did not already have them located in Asia. It only remains to buy better, which means at a lower price, which sooner or later ends up with a lower quality.
This year for the first time we have observed a new phenomenon in Europe, the “Single’s Day”. This time it comes from China. It is a promotion invented by Ali Baba, the Chinese Amazon, and which takes place on November 11. November 11 is 11/11 or 1111, four ones to represent Singles’ Day in which important promotions are carried out in China.
Three years ago on November 11, 2020, Ali Baba sold $ 74 billion during singles day. The first 6,000 M during the first 5 minutes of that day.
Well now, this new reason for making “exceptional” discounts, the Singles day, is coming to Europe, which will surely gain more strength in the coming years. One more way to eliminate intermediaries’ margin and lower the level of quality for consumers.
At Napo & Leon we don’t want to follow the wave of consumerism.
At Napo & Leon, we have been in the fashion market for 30 years, and we have lived through the time of sales and recently we experienced the frenzy of continuous promotions. We have seen the drop in quality in most brands, and in the durability of the garments. The result is an obsolescence that, if it was not programmed, is arriving before its time in the vast majority of cases.
We have chosen to manufacture here in Europe. We have decided to speak with our suppliers and explain to them that we want to stay here with them, in the long term, that if their prices work well and guarantee us the quality that we want, they will allow us to have a stable and growing business. Not an explosion but a business that will gain followers because they appreciate the quality of our products and know how to see the difference with other products on the market. Some providers have listened to us, others have not. We respect everyone’s decisions, but we have stayed with those who have bet on quality and the long term. They have entered the circle of the circular economy, of the product that goes back and forth and goes back and has a long life.
