The depth of Black Friday discounts depends on the robustness of retail supply chains – Business News

Photo: Mastermind Toys

Mastermind Toys CEO Sarah Jordan.

Amidst the flashy flyers and promotional emails, a gap has emerged between large and small retailers this Black Friday.

On the one hand, retail giants with sophisticated supply chains and robust inventory levels. They offer deep and widespread discounts, often combined with free shipping and no interest payment plans.

On the other hand, smaller stores are struggling with persistent supply chain headaches and rising costs, with less capacity for major cuts.

For consumers, this means that the best deals may not be on the goods they want or from the retailers they prefer to shop at.

“Many retailers have withdrawn a little bit on their discounts because they do not have the inventory to support the magnificent deals,” says retail analyst Bruce Winder. “Sales are overwhelming.”

Smaller brands and independent retailers tend to offer sales around 25 percent off regular prices, with some deeper discounts on previous seasons and discontinued items.

The Canadian clothing brand Pigeons, for example, offers modest discounts on its most popular classic items, with greater sales on its off-season items or styles that have not sold as well.

“We’re offering some discounts on our … core styles during Black Friday,” said Michael Macintyre, operations manager for Vancouver-based Pigeons. “But the deeper discounts are on the seasonal or discontinued items.”

Inflationary pressures and supply chain problems have prompted many retailers to approach Black Friday rebates more strategically this year, he said.

“Retailers will manage the rebates to get a little bit more gross margin on sales back to cover some of the logistics costs,” says Macintyre. “But it will also be a bit dynamic so that Black Friday deals can change and change based on demand and inventory.”

But as small and medium-sized retailers carefully put together sales to attract customers while still maintaining a strong profit margin, larger chains offer a deluge of offers, many of which started weeks before Black Friday.

Amazon, for example, announced it would have “more deals than ever before” with “deep discounts on top products” during its 48-hour Black Friday event Nov. 25-26.

Canadian Tire is also rolling out blowout deals for Black Friday, with dozens of sale items with 70 percent off the regular price and a few up to 85 percent off. The company recently acquired a stake in a BC inland port facility to strengthen its supply chain.

“Companies with really strong supply chains are in full swing,” says Winder. “If you have the inventory and logistics in place, you are not taking a chance because you know you can take some market share this year.”

Still, pre-holiday research suggests shoppers will be out in full force and spending dollars on both local businesses and larger stores.

Several studies have found that pent-up demand and the fear of shortages have encouraged consumers to cross items off their list early, pushing Christmas shopping even earlier than the typical “Black Friday creep” observed in recent years.

Black Friday is officially November 26 this year, while Cyber ​​Monday is November 29. But sales have already been running for several weeks.

“Black Friday is no longer a day, it’s a whole shopping season,” says Tandy Thomas, associate professor of marketing at Queen’s University’s Smith School of Business.

“Retailers are moving sales forward because consumers are looking for deals and buying earlier.”

She adds: “The perception of scarcity has also pushed the timeline even earlier this year.”

In fact, Mastermind Toys CEO Sarah Jordan says shoppers asked for the store’s signature gift wrap for Christmas gift in August – four months before Christmas.

“Holy shopping certainly peaks earlier,” she says. “We just had our best October in the company’s 37-year history.”

The Toronto-based toy retailer has sold out one of the hottest toys of the year – the Magic Mixies magic dew kettle – twice. Both times, the toy was sold out within 24 hours of it going on sale.

Surveys conducted in the time leading up to the holiday shopping period predicted a large consumption year.

“Canadians are expected to spend more this season than they did even before the pandemic, with many consumers floating around with savings and feeling optimistic about the economy,” said Deloitte Canada’s 2021 Holiday Retail Outlook.

Overall, Canadians plan to spend an estimated $ 1,841 on holidays compared to $ 1,405 last year – a 31 percent increase, Deloitte said in its holiday report. That’s also about eight percent above the $ 1,706 reported in 2019.

Deloitte also noted that growing concerns about supply chain problems and potential product shortages will persuade many Canadians – especially those who have coped well with the pandemic – to start shopping early. The report showed that 35 percent of holiday customers said they planned to start shopping by November.