Black Friday Hurts Brands

Shaan Puri shares insights about how different brands approach Black Friday, explaining that it's not just about discounts but a strategic balance between maintaining brand value and driving sales.

Key Points:

• Why Brands Need Discounts:

  • Clear excess inventory that ties up cash
  • Drive additional revenue and profit
  • Handle out-of-season or expiring products

• Black Friday's Unique Value Proposition:

  • Provides "air cover" for all brands to discount
  • Allows discounting without brand dilution
  • Creates a legitimate reason for premium brands to participate

• Brand Positioning During Black Friday:

  • Low-End Brands:
    • Always compete on price
    • Consistently offer discounts
    • Known as discount brands
  • Mid-Tier Brands (e.g., Nike):
    • Balance value with brand premium
    • Use Black Friday as legitimate discount opportunity
    • Maintain brand integrity while participating
  • Luxury Brands:
    • Can choose not to participate
    • Sometimes increase prices as a branding statement
    • Use the event to reinforce premium positioning

• Business Impact:

  • Some businesses make 50% of yearly revenue in 8-week holiday sprint
  • New brands struggle initially with Black Friday
    • Limited customer base aware of brand
    • Smaller pool of potential returning customers
  • Established brands see better results due to existing customer base

• Evolution of Success:

  • Initial years can be underwhelming for new brands
  • Success improves as brand awareness grows
  • Requires several years of building before seeing significant results