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Depth of Black Friday discounts depends on resiliency of retailers91Ƶ supply chains

Analyst says retailers may back off on on discounts because they don91Ƶt have the inventory
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Mastermind Toys CEO Sarah Jordan poses in this November 2021 handout photo. THE CANADIAN PRESS/HO - Mastermind Toys

Amid the flashy flyers and promotional emails, a divide has emerged between big and small retailers this Black Friday.

On one side, retail giants with sophisticated supply chains and robust inventory levels. They91Ƶre offering deep and widespread discounts, often coupled with free shipping and no interest payment plans.

On the other side, smaller stores struggling with ongoing supply chain headaches and rising costs, with less capacity for big markdowns.

For consumers, it means the best deals may not be on the items they want, or from the retailers they91Ƶd prefer to shop with.

91ƵMany retailers have backed off on their discounts a little bit because they don91Ƶt have the inventory to support those blockbuster deals,91Ƶ retail analyst Bruce Winder says. 91ƵThe sales are underwhelming.91Ƶ

Smaller brands and independent retailers tend to be offering sales around 25 per cent off regular prices, with some deeper discounting on past-season and discontinued items.

Canadian apparel brand Duer, for example, is offering modest discounts on its most popular classic items, with bigger sales on its out-of-season items or styles that haven91Ƶt sold as well.

91ƵWe offer some discounts on our 91Ƶ core styles during Black Friday,91Ƶ says Michael Macintyre, chief operating officer of Vancouver-based Duer. 91ƵBut the deeper discounts are on those seasonal or discontinued items.91Ƶ

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

91ƵRetailers are going to manage the discounts to capture back a little bit more gross margin on sales to cover some of the logistics costs,91Ƶ Macintyre says. 91ƵBut it91Ƶs also going to be a bit dynamic, so the Black Friday deals may shift and change based on demand and inventory.91Ƶ

Yet as small and mid-size retailers carefully curate sales to attract shoppers while still maintaining a strong profit margin, bigger chains are offering a deluge of deals, many of which started weeks before Black Friday.

Amazon, for example, announced it would have 91Ƶmore deals than ever before91Ƶ with 91Ƶdeep discounts on top products91Ƶ during its 48-hour Black Friday event Nov. 25 to 26.

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

91ƵCompanies with really strong supply chains are going full bore,91Ƶ Winder says. 91ƵIf you have the inventory and the logistics in place, you91Ƶre not taking a chance because you know you can take some market share this year.91Ƶ

Yet research ahead of the holidays suggests shoppers will be out in full force, spending dollars at both local businesses and bigger stores.

Multiple surveys have found that pent-up demand and the fear of shortages has encouraged consumers to cross items off their list early, pushing holiday shopping even earlier than the typical 91ƵBlack Friday creep91Ƶ observed in years past.

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

91ƵBlack Friday is no longer a day, it91Ƶs an entire shopping season,91Ƶ says Tandy Thomas, an associate professor of marketing at Queen91Ƶs University91Ƶs Smith School of Business.

91ƵRetailers are moving sales ahead because consumers are looking for deals and buying earlier.91Ƶ

She adds: 91ƵThe perception of scarcity has also pushed the timeline even earlier this year.91Ƶ

Indeed, Mastermind Toys CEO Sarah Jordan says shoppers were asking for the store91Ƶs signature holiday gift wrap in August 91Ƶ four months before Christmas.

91ƵHoliday shopping is definitely peaking earlier,91Ƶ she says. 91ƵWe just had our best October in the company91Ƶs 37-year history.91Ƶ

The Toronto-based toy retailer has sold out of one of the hottest toys of the year 91Ƶ the Magic Mixies magical misting cauldron 91Ƶ twice. Both times, the toy was out of stock within 24 hours of going on sale.

Research conducted in the run up to the holiday shopping period predicted a big spending year.

91ƵCanadians are expected to spend more this season than they did even before the pandemic, with many consumers flush with savings and feeling upbeat about the economy,91Ƶ Deloitte Canada91Ƶs 2021 Holiday Retail Outlook said.

Overall, Canadians plan to spend an estimated $1,841 on the holidays, compared to $1,405 last year 91Ƶ an increase of 31 per cent, Deloitte said in its holiday report. That91Ƶs also about eight per cent above the $1,706 reported in 2019.

Deloitte also noted that rising concerns over supply-chain issues and potential product shortages will persuade many Canadians 91Ƶ especially those who have weathered the pandemic well 91Ƶ to start shopping early. The report found 35 per cent of holiday shoppers said they planned to start shopping before November.

Meanwhile, brands that overcome supply chain challenges may find themselves winning new customers, the Deloitte report said.

91ƵAny company or brand that91Ƶs seen to go the extra mile to overcome supply chain challenges may find themselves winning new customers for the long term.91Ƶ

91ƵBrett Bundale, The Canadian Press





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