With Black Friday and the end-of-year sales approaching, the question is no longer just what discount to offer, but where to focus promotional efforts to truly create value.
In a climate of pressure on margins, high inventory costs, and customers who are increasingly price-sensitive, every promotional decision becomes a trade-off. Not all products warrant the same level of investment, and the volumes generated are no longer sufficient to measure performance.
For general management, sales, and finance departments, the challenge is therefore to identify metrics that can contribute to a specific objective: generating traffic, accelerating conversion, improving inventory turnover, supporting margins, or increasing the average order value.
Not all promotions should be handled the same way
A uniform discount remains appealing because it simplifies communication. A promotion such as “30% off the entire category” is easy for customers to understand and simple to implement operationally.
But this commercial simplicity can have serious consequences for margins.
Within a single product assortment, not all SKUs play the same role. Some help build the retailer’s price image. Others generate profit margins. Some serve primarily to attract foot traffic, while others increase the average basket size or help reduce excess inventory.
Applying the same promotional strategy to a best-seller, a new product, an overstock item, and a premium product therefore means ignoring their respective contributions to the category’s performance.
The first challenge, therefore, is to segment the product assortment not only based on historical sales but also on the economic function of each SKU. This approach also requires tools capable of translating this segmentation into operational promotional rules. A solution such as Maxxing , for example, enables you to manage differentiated promotional mechanisms, handle trigger conditions, stacking rules, and offer priorities, all while tracking their performance across different channels.
Pricing Is Key to Product Selection
Even before setting a discount level, pricing must make it possible to determine which products are truly worth promoting.
A promotion creates value only if the price reduction generates a sufficient response in demand or contributes to another business objective: driving traffic, improving inventory turnover, strengthening the price image, or increasing the average order value.
Several criteria must therefore be considered together: price sensitivity of demand, available margin, product visibility, ease of comparison with competitors, positioning within the product lineup, and the role the product plays in the retailer’s price perception.
A well-known and easily comparable product may justify a significant promotional effort if it contributes substantially to foot traffic. Conversely, a price reduction on a product for which demand is not very price-sensitive is likely to result primarily in sacrificing margin on sales that would have occurred anyway.
Pricing should therefore not only answer the question “What discount should be applied?”, but first “On which products should we focus our promotional margin?”
This analysis also helps determine the appropriate discount level. A discount that is too small may not change customer behavior; a discount that is too large may generate volume without creating sufficient additional contribution.
The goal, therefore, is to identify the point of promotional efficiency : the price level capable of triggering a sufficient commercial response without overinvesting in discounts.
During Black Friday, pricing thus becomes a tool for arbitrage: some products should be used to drive traffic, others to boost conversion rates or average order value, while still others simply don’t need to be discounted.
Should best-selling items be managed as an acquisition investment?
Certain products play a disproportionately large role in how the product lineup is perceived. These are often the most visible products, the best-known brands, or items whose prices are easily comparable.
For these products, aggressive promotion may be justified even if unit profitability declines sharply.
The logic is no longer based on profit margins per SKU, but rather on acquisition costs. If a heavily discounted item helps drive traffic, improve the store’s price perception, and trigger additional purchases, its performance must be measured at the shopping cart and category levels.
The question therefore becomes less: “How much are we making on this item?” but rather: “What value does this product generate?”
This shift in perspective is essential for sales and finance departments.
Best-sellers shouldn’t be over-promoted
Best-sellers are often the first products people want to include in a Black Friday promotion. However, they are also the ones where value erosion can occur most rapidly.
When a product is already selling very well at its regular price, an additional discount may simply reduce the margin on demand that would have existed anyway.
The risk is twofold: subsidizing natural demand and shifting purchases that would have been made a few weeks later.
Spectacular volume growth during Black Friday does not necessarily indicate strong performance.
The right metric isincremental growth.
We must seek to determine what portion of sales is truly incremental, and then measure the incremental margin generated after accounting for cannibalization and anticipated demand.
For senior management, this analysis is much more relevant than the raw change in revenue.
High-margin products offer greater flexibility
Products with high profit margins can be excellent candidates for promotions. They help create a perception of attractiveness while maintaining an acceptable level of profitability.
However, focusing solely on margin rates is insufficient.
The right metric is economic contribution after the promotion. Two products priced the same may have very different cost structures and, consequently, completely opposite promotional potential.
A more mature governance approach therefore involves setting minimum contribution thresholds rather than mechanically applying the same discount rate to an entire category.
This approach helps better protect overall profitability while maintaining an attractive commercial offering.
Can Year-End Promotions Be a Cash Flow Driver?
Black Friday should not be analyzed in isolation. It is part of a broader promotional sequence that extends through the holiday season and can become a powerful tool for managing inventory, cash, and working capital needs.
For certain products, the main challenge is no longer just to maximize short-term revenue or margins. It’s also about avoiding carrying excess inventory, older product generations, seasonal items, or products nearing a line refresh beyond the season.
In this context, the extent of the markdown must be determined by taking into account the cost of holding inventory, the risk of obsolescence, and the likelihood of having to apply an even larger markdown a few weeks later.
In other words, a can create value even when it reduces the unit margin, provided that it accelerates inventory turnover, frees up cash, and reduces tied-up capital.
The challenge, therefore, is less about protecting each individual margin point than about considering the overall economic value of inventory. An item sold at a larger discount in November or December can sometimes be more profitable—in the broadest sense—than a product held for several months before finally being sold under less favorable conditions.
For the executive committee, this trade-off is key: the best promotion is not always the one that maximizes the immediate margin, but the one that optimizes the margin–inventory–cash balance over the course of the season.
On the contrary, certain products must be protected
Black Friday should not lead to a culture of systematic discounts. Certain products—particularly new releases, premium products, or products that are strategic to the brand’s positioning—may lose more value than they create when exposed too early to deep discounts.
A premature price reduction can undermine the perception of value, weaken the brand’s positioning, and create a recurring expectation of promotions among customers.
In such cases, other strategies may be more appropriate: bundling, included services, loyalty perks, or exclusive benefits.
The challenge, therefore, is to identify the benchmarks that should be used to increase demand from those for which we need to preserve the value.
Profitability must be measured at the shopping cart level
One of the main pitfalls of promotional management is analyzing each SKU in isolation.
However, a low-margin item can be highly profitable if it consistently triggers additional purchases.
This is particularly true in product categories where the main item is sold alongside accessories, consumables, warranties, or services.
A heavily discounted TV, for example, can help drive sales of a soundbar, a wall mount, or an extended warranty. Taken on its own, the loss leader may seem unprofitable. But when analyzed in the context of the entire shopping cart, it can actually generate significant revenue.
This perspective provides a better understanding of the true economic role of promotions.
Flexibility Must Replace Intuition
The discount percentage is not, in and of itself, a performance indicator.
A price reduction only makes sense if it triggers a sufficient response in demand.
For some products, moving from a 10% discount to a 20% discount generates a significant increase in sales volume. For others, the effect is marginal.
Historical data must therefore be used to identify the price thresholds at which demand actually responds.
The question is no longer: “What discount can we offer?”
It becomes: “What discount level maximizes the economic contribution of this product?”
This approach aligns category management more closely with an optimization strategy than with a simple sales promotion strategy.
Cannibalization remains one of the main blind spots
A promotion can deliver excellent performance at the SKU level while destroying value at the category level.
When a discounted product simply captures demand for a similar product, the SKU’s sales increase, but overall performance does not necessarily improve.
Analysis must therefore go beyond the SKU level and examine multiple levels: the SKU, the subcategory, the category, the shopping cart, and, ideally, the customer.
The right metric is not the growth in sales of the promoted product, but the net growth in the category’s contribution.
Think in Terms of a Promotional Portfolio
An effective Black Friday strategy shouldn’t be viewed as a catalog of discounts.
It should be conceived as a portfolio of complementary roles.
A few select items can serve as loss leaders. The core product line can be used to maximize conversion. Certain items must maintain profitability. Others can be leveraged to accelerate inventory turnover. Finally, complementary products can help improve the average order value and overall margin.
This architecture allows us to assume that it is neither necessary nor desirable to simultaneously maximize volume, margin, and discount rate for each product.
Each product must have an explicit objective.
The real trade-off is between revenue, margin, and cash
Black Friday brings together several objectives that can conflict with one another: revenue growth, margin preservation, new customer acquisition, inventory reduction, or maintaining a competitive position.
An organization’s maturity is therefore measured less by its ability to execute a promotional campaign than by its ability to balance these objectives.
A retailer may agree to significantly reduce its margin on a few highly attractive products, while protecting premium products and applying deeper discounts to targeted excess inventory.
The goal is not to optimize each product individually, but to maximize the value created across the entire portfolio.
The planning process should be based on several scenarios
Before launching the operation, the sales and finance departments should simulate several options.
One scenario might prioritize volume growth, another profitability, and a third inventory reduction and cash generation. A hybrid scenario then allows for balancing these different priorities.
The value of this exercise lies less in accurately predicting the outcome than in making management’s choices explicit.
Which products are used as acquisition drivers? For which SKUs are we willing to accept a lower contribution margin? Which inventory items need to be moved more quickly? Which categories, on the other hand, need to maintain their price levels?
It is these trade-offs that turn Black Friday into an exercise in strategic management.
Rethinking Performance Metrics
Revenue remains an important metric, but it shouldn’t be the only one.
For an executive committee, four categories of KPIs are particularly useful: incremental sales, actual margin generated, inventory trends, and the quality of acquired customers.
Average basket size, customer retention rate, out-of-stock rates, and post-Black Friday repurchase rates then help refine the analysis.
This perspective is important because strong performance over a few days can mask margin erosion or simply a temporary shift in demand.
The success of Black Friday, therefore, isn’t judged solely during the event. It’s also measured in the weeks that follow.
From Discounts to Value Creation
Black Friday is no longer just a race for the highest discount percentage.
True performance depends on the ability to differentiate the role of each product: some are meant to drive traffic, others to boost conversion, maintain margins, accelerate inventory turnover, or simply remain off-promotion.
It is this portfolio analysis that allows us to move beyond a purely commercial mindset and adopt a more comprehensive economic approach.
Pricing, inventory, margin, elasticity, and cannibalization must therefore be analyzed together. A promotion is only worthwhile if it serves a clear objective and if its contribution goes beyond simply generating volume over a few days.
For senior management, sales, and finance teams, the challenge is therefore no longer simply deciding which products to promote, but which SKUs truly merit a promotional investment—and for what purpose.
Black Friday and, more broadly, end-of-year promotions thus become an exercise in balancing volume, margin, inventory, and value creation.
