Target’s Black Friday playbook: Promotion tactics & takeaways

First up? We’re tackling Black Friday promotions: traditionally a margin-busting dilemma for retailers, Target’s 2023 strategy offers a masterclass in how to drive demand, without discounting into oblivion.

Consumers anticipate big deals on Black Friday, making it a high-stakes event for retailers. With the 2023 holiday season setting new records and Cyber Week spending up 7.8% to reach $38 billion, the challenge is clear: how can retailers satisfy demand without sacrificing margins?

American retail leader Target stands out as an excellent example: let’s delve into their tactics and the key takeaways brands can implement this year.

A huge part of driving demand on Black Friday lies in offering easy access to deals. Target developed a dedicated Black Friday landing page for its best deals, catering to deal-hungry consumers and grouping all promotions in one centralized place. This simplifies customers’ shopping journey, enhancing overall experience and satisfaction.

Highlights from Target's Black Friday landing page included:

Creating a dedicated landing page for Black Friday deals allows customers to easily access all your offers in one place. Feature a variety of promotions, such as bundles and BOGOs, to increase basket size without deeply discounting individual items.

Instead of running steep, category-wide discounts, Target kept the majority of deals in the 20%-40% range. The emphasis was on creating a compelling value proposition without implementing unsustainable price cuts. Using this approach, Target avoided the pitfalls of extreme discounting, which erodes margins and puts pressure on the business to achieve higher sales volumes.

Their discounting strategy included: 

Whether it’s Black Friday or throughout the year, avoid using generic, heavy discounting. For large retailers, limiting your discount rates - even by just a fraction of a percent - rolls up to millions of dollars of savings and percentage point improvement to margin over time. 

Your promotions should instead encourage customers toward a rewarding, long-term relationship, maintain brand’s perceived quality, and improve margins by emphasizing value over volume.

Black Friday is a fantastic awareness and acquisition opportunity for your loyalty program. Target reserved the best Black Friday deals for its loyalty program members, encouraging sign-ups and retention.

This included:

Black Friday isn’t just a time to boost Q4 sales or get overstocked products out of the door. It’s also a unique opportunity to attract new customers and convert them into loyal members who will continue to shop long after the holiday discounts have ended. Offering member-only rewards is an effective strategy to cultivate long-term customer relationships, encouraging engagement long beyond the seasonal shopping frenzy. 

Target’s Black Friday 2023 strategy turned heads by focusing on value rather than deep discounts. They showcased full-price items alongside select deals, reinforcing their affordability while protecting margins. This savvy approach not only highlighted their best offerings but also set a new standard for how to balance value and profitability.

To reach its profitability goals while creating a valuable customer experience, Target built a promotional strategy that featured: 

Target's successful Black Friday strategy highlights the importance of balancing value with profitability. The economic climate has made shoppers more hesitant to open their wallets, but retailers don’t need to rely solely on heavy discounts. Instead, they should focus on a mix of low-priced items and targeted discounts to provide value for customers while maintaining healthy margins.

Target’s approach set them up for a bumper 2023 Black Friday weekend: its Q4, 2023 earnings revealed a 2.1% increase in operating income and a 2.9% rise in gross margin compared to 2022. The rising figures were achieved due to “lower markdowns and other inventory-related costs, lower freight costs, lower supply chain and digital fulfillment costs, and favorable category mix.” 

Brands can take a page from Target’s playbook by focusing on value-driven promotions, maintaining price integrity, and strategically managing costs. By highlighting the value of full-price items and mixing in well-placed deals, retailers can boost profitability and customer satisfaction simultaneously.

Target COO, John Mulligan, highlighted this sales strategy ahead of last year’s holiday shopping season:

With over 8 years of experience working with leading global retailers to enhance their Black Friday strategies, Talon.One offers many of the effective promotional mechanisms employed by Target. Talon.One integrates seamlessly into even the most complex tech stacks, ensuring smooth and easy promotion redemption at the point of sale (POS). This reliability is crucial during the holiday season, when increased checkout activity can otherwise lead to costly downtimes for brands.