Xero, the global small business platform, has released new research highlighting how Australian small businesses feel about participating in Black Friday this year. The survey of 551 Australian small businesses reveals 60% agree there is pressure to compete with big businesses during Black Friday sales, and nearly a third (29%) of those not planning on taking part this year can’t afford to offer discounts.
The survey explored the relationship small businesses have with Black Friday and found that nearly a quarter (24%) of small businesses are not engaging in the event this year, and a further 25% are unsure if they will.
Angad Soin, Managing Director, ANZ, Xero, said: “Only half of small businesses are leveraging the opportunity to take part in Black Friday, despite it being touted as one of the most important sales events on the annual calendar. The reasons for not doing so are varied but the primary factors point to a concern around how they can participate while driving growth sustainably.”
While affordability is the biggest driver for not participating, other reasons include not having enough stock or inventory to support the event (19%), the logistics are too difficult (11%) and concerns that discounting would negatively impact their profit margins (15%). Small businesses who previously participated in Black Friday shared a similar sentiment, with more than a quarter (26%) stating budgeting and forecasting cash flow as a key challenge.
Sustainability and brand image a concern
Personal attitudes towards Black Friday and discounting also drive rejection of the sales event among small businesses. More than a third (34%) of those surveyed say they rarely or never offer discounts because they believe it devalues their business’ goods or services. Some businesses who are not planning on participating in Black Friday this year revealed they do not feel beholden to sales, with nearly a quarter (24%) feeling confident their customers will shop with them regardless. Moreover, nearly one quarter (23%) of small businesses with 11-20 employees, who are not planning on taking part this year, feel Black Friday sales are environmentally unsustainable.
Jess and Stef Dadon, founders of Melbourne-based sustainable footwear brand, TWOOBS, said: “TWOOBS doesn’t participate in Black Friday because we believe that major sales events like Black Friday are contributing to overconsumption culture. The response from our customers has been overwhelmingly positive, and most are excited to see a brand putting the planet above sales. We’ll be using our social media channels over the Black Friday period to ignite thoughtful conversation about what overconsumption means for our planet, and to educate and inspire consumers and other brands.”
Customer retention is a key motivation to participate
Meanwhile, those 50% of Australian small businesses who will participate in Black Friday are doing so primarily to grow and strengthen their customer base. Respondents are hoping to reach new customers (48%), build loyalty with existing customers (42%) and meet customer demand (39%). Xero’s research also suggests an eagerness to boost sales may be pushing participation for small businesses who often offer discounts, with 55% saying boosting sales and cash flow was a reason they hold sales.
Angad Soin added: “Cash flow is critical for small businesses, and greater visibility of it can help them make better choices around discounting and marketing spend for events like Black Friday. We’d suggest small businesses speak with their advisor to work out what makes sense for their situation, plus take advantage of tools that are available to help with understanding their options.
“Leveraging the groundswell of major events like Black Friday can be a great opportunity to remind customers why supporting small businesses matters. As a big believer in shopping local and supporting small businesses, I hope other consumers do the same and keep their favourites top of mind during the busiest retail period of the year.”
