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Boost Capital

Christmas Versus Black Friday – The Most Important Dates In The Retail Calendar

10 October 2016 09:30


By Alex Littner, managing director of Boost Capital

WHILE most people were enjoying the last rays of summer, retailers were already thinking ahead to the Christmas sales. The build-up to the busy December season, the most important time in the retail diary, takes months of preparation. But smaller vendors with limited resources need to decide whether to concentrate their efforts on the traditional Christmas shopping rush, or also to make a bid for the Black Friday bargain hunters. What should SMEs be doing now to gear up for Christmas? Can small operators also afford to take part in the November event? And will they miss out by choosing one over the other?

Always have a plan

Whether a business is participating in the Black Friday sales on November 25th or holding off until December, one thing is certain – having a happy festive season means planning now. There’s stock to be ordered; logistics, deliveries, and staff to be organised; and marketing strategies and promotions to be finalised and executed. Plus, an enterprise must be confident there’s enough money in the coffers to pay all the necessary expenses and keep cash flowing in order to get through the coming months without disruption.

Small firms can be lax when it comes to these important matters, with a shocking three out of four not having a strategy in place for boosting Christmas sales, Lloyds Bank research ( ) has found. Such a casual attitude will mean SMEs lose out severely to their larger rivals, all of whom will have plans to win customers in the weeks to come. Smaller operators also need to crunch the numbers to identify any financial shortfall looming, so they can organise bridging finance ( ) or extend their overdraft if necessary. So, if retailers don’t yet have a serious plan of attack for the weeks ahead, where should they start?

Black Friday – boom or bust?

Black Friday divides the retail community, with some saying it’s a great chance to increase sales, while others think it a lot of effort and disruption for little reward. Last year, participating SMEs reported ( ) that their average sales were up by 40 per cent on the day. However, others point out that such aggressive discounting only brings short-term gain, and can eat into companies’ profit margins.

Many household names shun the early sales frenzy – Asda, Argos, Primark, John Lewis, and Mothercare all ignored Black Friday last year or scaled back their efforts. Why? Because evidence suggests that while people spend a lot on the day itself, sales over the entire festive period don’t increase. In fact, sales growth after the November sales day are often pathetic. Plus, concentrating so much trade into two days puts huge pressure on customer service, deliveries, and the returns process.

When one considers most small retailers can’t afford to match the rock-bottom prices of their large peers, it can seem more sensible to stick to conventional Christmas promotions that build slowly. Online retailers may still find Black Friday an opportunity, as more shoppers are choosing to avoid the crowds in-store, and find deals on the internet. This could also extend to Cyber Monday, the online sales event that rounds off the Black Friday sales weekend. But small vendors will still require a robust, tried-and-tested system in place that can handle extra web traffic and orders. Fundamentally, weigh up whether the price cuts will yield sufficient profit – if not, think twice.

Christmas comes but once a year

However, offering no discounts, offers, or promotional activity at all in the run-up to the busiest shopping period of the year is madness. When almost £76 billion was spent in Britain during the festive season last year, it makes sense for small companies to grab a slice of the action. How to win those extra customers is the million-dollar question.

The most common method of pulling in punters is price promotion. As with Black Friday, the challenge is to develop a pricing tactic that appears to shoppers to be a good deal, but still gives the business owner an adequate profit margin. Calculating the company’s breakeven point ( ) should be an exercise undertaken throughout the year to reflect different factors affecting the business cycle. Knowing the operation’s costs and revenue means you know when you’re in profit – and by how much. This allows SMEs to determine by how much to trim prices. Also, research rival firms’ discounting, and whether you can – or should - match their efforts.

The virtue of being small

Being small and independent can be an advantage. Consumers say ( ) they prefer independent retailers both in the high street and online, and younger shoppers are particularly enthusiastic about non-chain operators. Play to your strengths when thinking about how you market the business, and emphasise what’s unique about it. This may be that it is traditional and family-run; innovative, fresh, and unlike any other in the market; or closely in touch with its customers and part of the local community. Maximise this distinct advantage in the way you communicate with would-be Christmas customers.

Running a loyalty scheme is a cheap way to encourage people to shop with you, and not just during the rush to buy presents in December. Digital technology has made gathering customer information easier, and it can be used to market the business via email and social media throughout the year. As well as offering discounts to regular shoppers, why not reward them with free samples, the ability to give feedback on proposed new products, or entry to special festive events? Making people feel involved is a great way to inspire shopper loyalty and return business.

If yours is a bricks and mortar retailer, you could also join with other shops nearby to run a series of late-opening evenings to attract more people to the high street for a night’s entertainment and shopping. And don’t ignore the benefits of old-fashioned posters, flyers, and email mail-shots either – research shows shoppers respond strongly to these direct forms of marketing. The important thing is to let customers know as soon as possible what’s on offer, and why they should shop with you this Christmas.

Practical matters

Once you know how you want to market the business this Christmas, when you’ll make your promotional push, and what you intend to offer customers – and at what price – there’s still the nuts and bolts of getting stock in and out of the door to take into account. If your business has been in operation for some years, study previous festive trading periods to get an idea of what items were popular – and any mistakes made. Do you need more regular stock, or Christmas-specific items? Discuss options with your suppliers to see if they can hold your inventory for you until you need it to save storage issues. And talk early to delivery companies to ensure you can fulfil orders quickly, including international orders, which are likely to arrive early, as well as handling the inevitable returns from Boxing Day onwards.

Christmas does seem to arrive earlier every year, and it will be upon us before we know it. Planning now to capture as much of the festive spend as possible should mean SMEs have much to celebrate come January.


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Press Contacts

Alex Littner

Managing Director

Tel: 01245 240 881


Rosanne Catton

Marketing Manager

Tel: 01245 240 882


Willem van Lynden

Sales and Marketing Director

Tel: 01245 240 885


About Boost Capital

As a specialist small business lender, we're champions of the SME sector. We are here to help UK SMEs achieve their full potential by providing fast, flexible, and hassle-free small business loans.

We have over 14 years' experience helping SMEs with their plans to grow. We've helped more than 14,000 businesses across 400+ industries, and have funded more than £750m.

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