Small retailers are especially jumpy at the poker table this holiday season. They've managed to survive one of the bleakest recessions on record, have hoarded a small amount of chips to play with, and they hear that shoppers may finally be willing to return to the table.
This is no time for small bets and early folds. This coming weekend you better be all in with steep discounts, because your competitors will certainly be wowing and wooing your customers with unheard of prices.
Rafi Mohammed, a pricing strategy consultant, writes on Harvard Business Publishing that this coming Black Friday will be your best shot to reintroduce yourself to former customers who put away their wallets over the last year. Make an impression, he says.
"In normal times, the right strategy would be to hold steady on margins and bank profits. Why start a margin-eroding price war? But this season is different; the head-turning discount you offer shoppers today will pay off handsomely over the long run."
I agree that retailers who don't jump into significant discounting will disappoint shoppers. But it is a tricky play. If consumer malaise is still prevalent this coming weekend, you might find yourself sold out of money-losing product without having rebuilt relations with the people you need to win back.
So what's your Black Friday strategy? The National Retail Federation predicts prices will decline just 1%, to $437.6 billion. Is your bet that the recession is still on and wait-and-see might be the play that wins the game this year? Or are you confident people might be in a buying mood?