Now that Black Friday has come and gone, Australian small and medium-sized businesses (SMBs) are reflecting on whether it was worth participating, especially given the current economic pressures. With the cost of living crisis affecting both businesses and consumers, new data from Xero reveals the complex decision-making process behind joining the sales frenzy and the impact of discounting on SMBs.
A survey of over 550 small business owners has uncovered a mix of attitudes towards Black Friday, with many feeling the weight of competition from larger retailers. Around 60% of businesses surveyed reported feeling pressure to compete with big businesses during Black Friday, highlighting the challenge of standing out in a crowded marketplace.
Despite the pressures, half (50%) of SMBs will participate in Black Friday this year. For many, it’s a necessary strategy to stay relevant. A third of respondents (34%) say they feel compelled to offer discounts to keep up with larger competitors, while 33% are concerned about losing customers to other businesses offering promotions. This constant need to offer discounts is a balancing act, with small business owners aiming to drive sales without eroding their profit margins.
However, not all businesses are jumping on the Black Friday bandwagon. A quarter (24%) of SMBs have opted out of the event this year. The main reason cited by these businesses is affordability, with 29% saying they simply cannot afford the discounts and promotions associated with Black Friday. Other barriers include inventory limitations (19%) and logistical challenges (11%), which can complicate the ability to meet the surge in demand. For some, the fear of undermining their profitability through heavy discounting is also a concern, with 15% saying they believe it could hurt their bottom line.
For many smaller businesses, offering regular discounts is simply not sustainable. The survey revealed that 37% of all businesses rarely or never offer discounts, as they can’t afford to do so. In an era of rising costs and squeezed margins, many SMB owners are focusing on maintaining the quality and value of their products rather than relying on sales events to boost business.
So, was Black Friday worth it for Australian SMBs this year? The answer depends on the individual business and its circumstances. For some, the event is an essential sales opportunity, a chance to compete with larger players in the market. For others, however, Black Friday’s reliance on discounting feels unsustainable, especially in an economic climate where margins are already thin. As the cost of living continues to rise, many small businesses may need to rethink their approach to sales and discounting in order to survive and thrive in the long term.
