The Hidden Cost of Black Friday
The Hidden Costs of Black Friday and Cyber Monday for Small and Independent Retailers: A Comprehensive AnalysisThis report brings together the latest industry data, academic research, and insights from Shelf Planner’s customers from 2022 to 2024.
It’s a comprehensive guide that’ll help small and independent retailers understand and deal with the hidden costs of Black Friday and Cyber Monday.
Black Friday and Cyber Monday (BFCM) have become the cornerstone of the holiday shopping season, driving unprecedented sales volumes and consumer engagement. For large retailers, these events offer lucrative opportunities to clear inventory and capture market share.
However, for small and independent retailers, the story is more complex. Beyond the obvious costs of discounts and promotional expenses, BFCM introduces a host of hidden financial, operational, and environmental challenges that can undermine profitability and sustainability.
In this report. we’ve pulled together the latest industry data, academic research, and insights from over 500 of our customers at Shelf Planner.
It’s a deep dive into how consumer behaviour changes during this festive season, how it affects our margins and inventory, and what we can do to make things more sustainable. Plus, we’ve got some practical tips and tricks for you to navigate these challenges head-on.
Changing Consumer Trends
Consumer behavior during BFCM is characterized by distinct phases: pre-BFCM anticipation, peak event purchasing, and post-BFCM reflection. Understanding these trends is essential for small retailers to tailor strategies and mitigate risks.
Pre-BFCM: Anticipation & Delayed Purchases
In the weeks leading up to Black Friday, consumers increasingly delay purchases in anticipation of deeper discounts.
This consumer behaviour is of course to be expected, as most brands, small and large, build up towards Black Friday weeks in advance.
We analysed sales data from over 500 retailers, normalized the sales quantity (remove campaign effects and seasonality) to get to an index by week.
As you can see in the graph, a clear pattern emerges 1 to 2 weeks prior to Black Friday (week 48 in 2024).
Smaller retailers often don’t have the same marketing power as larger players.
The result is a noticeable drop in sales for small retailers, who lack the marketing muscle and inventory buffers of larger chains to sustain revenue during this lull. This delayed spending creates cash flow challenges and increases pressure to discount inventory broadly to compete.
Average Sales Drop in weeks prior to BFCM reaches up to 24% Source: my.shelfplanner
During BFCM: Impulse Buying & Channel Preferences
Black Friday triggers a surge in impulse buying, fuelled by limited-time offers, flash sales, and psychological pricing strategies.
The average discount across categories exceeds 30%, driving significant consumer demand.
Social media and influencer endorsements play a pivotal role in shaping purchase decisions, with nearly half of shoppers using social media to discover deals.
This shift to digital channels favors e-commerce, but small retailers must also manage instore traffic and omnichannel consistency.
Post-BFCM: Returns & Sales Slump
Following the week of Black Friday, our research shows that small retailers often face a prolonged sales slump lasting up to three weeks. Consumers, having made major purchases during the event, reduce spending as they recover financially and reflect on their purchases. This slump is made worse by a significant spike in product returns, as consumers take advantage of lenient return policies and return items that do not meet expectations or were purchased impulsively. The combination of reduced sales and increased returns creates a double blow to profitability and operational efficiency.
Social media and influencer endorsements play a pivotal role in shaping purchase decisions, with nearly half of shoppers using social media to discover deals.
This shift to digital channels favors e-commerce, but small retailers must also manage instore traffic and omnichannel consistency.
Financial & Operational Impact
The financial impact of BFCM extends far beyond the visible discounts. Small retailers face a complex interplay of margin erosion, shipping costs, and inventory inefficiencies.
Margin Loss & Discount Pressure
The pressure to offer deep discounts across a broad assortment leads to margin erosion. Small retailers often lack the scale to absorb these losses and may feel compelled to discount more heavily to compete with larger players.
The average discount of 30%+ during BFCM significantly reduces net profit per sale, especially when combined with increased shipping and logistics expenses.
Margin Loss & Discount Pressure
Shipping costs surge during BFCM due to increased order volumes and expedited delivery expectations. High shipping costs are a leading cause of cart abandonment, particularly among women shoppers.
Small retailers often struggle to offer competitive shipping options, which can erode customer satisfaction and conversion rates.
The spike in shipping expenses further squeezes margins, making it critical to optimize logistics and consider strategies like free shipping thresholds or partnerships with logistics providers.
Inventory KPIs & Overstock Risk
BFCM demand volatility disrupts inventory management, leading to overstock situations and increased risk of dead stock. Suppliers prioritize larger clients during peak seasons, leaving small retailers with unreliable restocking and potential stockouts
This imbalance forces small retailers to overorder to avoid stockouts, resulting in excess inventory and ‘dead stock‘ that must be liquidated at a loss post-BFCM.
The impact on key inventory KPIs, such as sell-through rates and stock turnover, can linger for weeks, affecting cash flow and profitability
Sustainability & Supply Chain Impacts
The environmental footprint of BFCM is substantial, with significant implications for small retailers’ supply chains and sustainability goals.
Carbon Footprint & Emissions
The surge in online orders during BFCM leads to a 94% increase in CO₂ emissions from delivery vehicles compared to a typical week.
The reverse logistics of returns further exacerbate emissions, with the return process consuming 1.2 billion gallons of diesel fuel and emitting 12 million metric tons of carbon dioxide globally.
These emissions contribute to the broader environmental impact of BFCM, which includes increased energy consumption in warehouses and distribution centres.
Packaging Waste & Recycling Challenges
Packaging waste accounts for 40% of global plastic waste, most of which is not recycled. The intense packaging demand during BFCM results in a substantial accumulation of discarded boxes, bubble wrap, and single-use plastics.
This waste poses significant environmental challenges, particularly for small retailers who may lack the resources to implement sustainable packaging solutions
Social media and influencer endorsements play a pivotal role in shaping purchase decisions, with nearly half of shoppers using social media to discover deals.
This shift to digital channels favors e-commerce, but small retailers must also manage instore traffic and omnichannel consistency.
Supply Chain Strain & Operational Inefficiencies
The rapid expansion of e-commerce and the “always peak” retail environment create operational inefficiencies in warehouses and distribution centres.
Inefficient lighting, heating, cooling, and fulfilment processes contribute to Scope 2 emissions. Smaller, independent retailers often face additional strain as suppliers prioritise larger clients, leading to unreliable restocking and increased risk of over-ordering and dead stock.
This waste poses significant environmental challenges, particularly for small retailers who may lack the resources to implement sustainable packaging solutions
Social media and influencer endorsements play a pivotal role in shaping purchase decisions, with nearly half of shoppers using social media to discover deals.
This shift to digital channels favors e-commerce, but small retailers must also manage instore traffic and omnichannel consistency.
Black Friday Impacts & Mitigating Strategies
Impact
Description
Mitigating Actions
Pre-BFCM Sales Drop
Consumers delay purchases in anticipation of discounts, reducing pre-BFCM sales
Staggered promotions, early access for loyal customers, clear communication about deals
Margin Erosion
Deep discounts and shipping costs reduce net profit per sale
Optimize discount strategy, offer free shipping thresholds, leverage print-on-demand services
Shipping & Logistics Costs
Surge in shipping expenses and cart abandonment due to high costs
Partner with logistics providers, offer competitive shipping options, use AI for demand forecasting
Post-BFCM Sales Slump
Prolonged sales decline following BFCM due to consumer financial recovery and regret
Emphasize quality over discounts, offer extended warranties, engage customers via loyalty programs
Return Spike
Increased product returns post-BFCM erode margins and create logistical challenges
Clear return policies, restocking fees, virtual try-ons, repurpose returned items
Inventory Overstock
Overordering to avoid stockouts often leads to excess inventory and dead stock.
Data-driven forecasting, pre-orders, collaborations to share logistics and storage
Sustainability Impact
Increased CO₂ emissions, packaging waste, and supply chain strain
Adopt eco-friendly packaging, carbon-neutral shipping, optimize warehouse efficiency
Customer Loyalty
BFCM drives loyalty program engagement but risks brand perception erosion
Personalized experiences, consistent brand messaging, innovative loyalty activities
Conclusion
Black Friday and Cyber Monday present small and independent retailers with a double-edged sword: the opportunity for significant sales growth is accompanied by hidden financial, operational, and environmental costs that can undermine profitability and sustainability.
The consumer behavior shifts—delayed purchases, impulse buying, and post-purchase regret—create distinct challenges in sales patterns and returns.
The financial impacts of margin erosion, shipping costs, and overstock situations are particularly acute for small retailers lacking the buffers of larger players. Moreover, the environmental footprint of increased shipping, packaging waste, and supply chain strain poses long-term sustainability concerns.
To thrive in this environment, small retailers must adopt strategic, data-driven approaches to inventory management, customer communication, and promotions. Alternative sales models and sustainability initiatives offer pathways to reduce environmental impact while maintaining customer loyalty and profitability.
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