According to Statistics South Africa, South African retail sales fell 4% year-on-year in 2020, indicating a contraction in Black Friday sales for last year. While the private sector has felt an economic slump during the COVID-19 pandemic, lockdown restrictions have begun to ease, and many businesses are hopeful for economic recovery. To mitigate risks, SMEs should factor in careful financial management during peak trading periods such as Black Friday.
“SMEs are often at a disadvantage against larger, more established businesses. While Black Friday is an excellent opportunity for them to grow their business through attracting and retaining customers, SMEs should ensure they have enough working capital to balance operational demands.” says Tom Stuart, Chief Marketing Officer at Lulalend.
While most businesses participate in Black Friday, not all businesses benefit from it to the same degree. Depending on which sector an SME operates in, it will be important to ensure a strategy is in place that considers opportunities and risks during the Black Friday sales period. Where retail businesses are likely to see an increase in sales, SMEs offering professional services are unlikely to feel a significant impact.
“The varying impact of Black Friday across different sectors will mean that SMEs need to plan their finances to ensure they are protected against a potential slowdown in sales. Implementing sound financial management tactics will help SMEs ensure they are still able to cover important operational costs despite this,” added Stuart.
For SMEs in the retail sector, it will be critical to ensure that enough stock is available to satisfy sales volumes and that the necessary logistics are in place to guarantee delivery of all sold items. Stock will need to be secured well in advance and a trustworthy delivery partner will need to be ready to manage delivery logistics. By taking out a short-term loan with a deferred repayment option, SMEs can ensure that adequate quantities of stock is bought before Black Friday and that a delivery partner is paid and secured to ensure customers receive their orders on time. The revenue from sales can then be used to help settle the loan.
By marketing Black Friday specials well in advance, prospective customers will have a clear idea of what to expect and how it will benefit them. An enticing social media or email marketing campaign can play a crucial role in raising awareness of the business, driving traffic to its website, and generating a sense of enthusiasm around Black Friday deals.
Black Friday deals need to bring clear value to attract customers. By taking a strategic approach, SMEs can reward their existing customer network for their loyalty by offering an additional discount on Black Friday specials. Another approach is to offer a discount to new customers when they agree to sign up to a mailing list. Curated offers create a sense of valued treatment among customers and could be highly effective in growing sales.
Keeping a close eye on larger competitors’ sales and marketing approaches can help SMEs find ways to leverage their unique offerings. As an example, some larger retailers may have difficulty delivering products within the first two weeks of sales owing to delivery volumes. This could be an opportunity for an SME to procure a delivery partner who can guarantee delivery in a shorter timeframe.
“While SMEs may have limitations in terms of what they can deliver for Black Friday, careful planning can help distinguish them from their competitors. This should have long-terms benefits not only in terms of growing their business, but in growing their reputation,” Stuart concluded.
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