E-commerce

Why small businesses fear a Black Friday backlash

New research reveals that almost six in 10 small-business owners, including independent retailers, consider Black Friday to have become a bigger sales event than Boxing Day.

So, why are fewer small businesses planning to participate in 2025? The survey of 500 Australian small businesses, conducted by global small-business platform Xero, cites affordability concerns in a tough economic climate.

Despite an awareness that consumer appetite for bargains is growing, many small businesses just can’t afford to service that demand. Nearly two-thirds (64 per cent) of respondents admitted to feeling under pressure to compete with big brands in the run-up to Black Friday – a 4 per cent increase year-on-year on last year.

Only 39 per cent of respondents are committed to discounting for Black Friday, a drop of 22 per cent on 2024. Nearly a third (30 per cent) say they can’t afford to offer discounts, while a quarter (25 per cent) believe that their customers will continue to buy from them without the carrot of one-off discounts.

And those small businesses that are participating in Black Friday sales are more guarded in how they price their products and services. One in 10 anticipate lower Black Friday sales revenue than last year, a drop in sales, highlighting the growing challenge of competing with major retailers. However, more than half of those getting involved (57 per cent) are bullish about a sales-time revenue uplift.

“Black Friday isn’t just a big business event anymore. It offers real opportunities for small businesses to connect with new customers and strengthen loyalty,” Angad Soin, global chief strategy officer and MD AU/NZ at Xero, said. “Black Friday forces a tough decision. Small-business owners have to gamble the opportunity of increased sales against the real-world pressures of higher costs and tighter margins, all while protecting their day-to-day cash flow.”

The reasons small businesses are engaging with Black Friday are also evolving. In 2025, 59 per cent of small businesses are doing so to attract new customers, up from 48 per cent in 2024, while for 45 per cent, the major motivation is building customer loyalty as a key motivator.

The decision to discount for Black Friday has been a tough one – 40 per cent of SME owners doing so fear an impact on their profit margins.

“To discount or not to discount must be a strategic decision, not reacting to short-term pressure and instead building a healthy business all year round,” Soin cautioned. “This is where digital tools are critical. Knowing your exact cash flow turns a reactive ‘pressured discount’ into a calculated, strategic move that you know you can afford..

“Small businesses are the heart of our communities and the backbone of our economy, and I strongly believe in supporting local,” Soin added. “I encourage all Australians to get behind their favourite small businesses where they can, not just during Black Friday, but throughout the year.”

Business owners not participating in Black Friday sales have compelling and strategic reasons for opting out. We spoke to two small-business owners in trailblazing sectors when it comes to Black Friday deals and discounts to find out why they are opting out this year.

Alison Lennard is the owner and designer at Philosophy Australia, a local fashion label where every garment is designed and made in Sydney, touched by fewer than 15 pairs of hands from sketch to dispatch. Ali’s approach is to create slow, intentional, sustainable fashion items that last for years, meaning that the Black Friday ‘frenzy’ of cut prices and discounts doesn’t align with her approach to business.

“As a small Australian fashion brand, I’m saying no to Black Friday,” Ali says. Not because I don’t believe in sales or supporting customers. But the model simply doesn’t work for independent makers who value sustainability, fairness, and community.

Black Friday was built for big players with offshore production, huge margins and the ability to absorb deep discounts,” Ali adds. “For small Australian brands like mine, it encourages unsustainable overproduction, undervalues the people who make our clothes, and teaches customers to expect constant markdowns.”

Maddie Begala, founder of Pinchy, a lifestyle brand with homewares to the fore, told us that she has already built a community of customers who appreciate her commitment to high-end design, resulting in high demand for her products. “Instead, this year we decided to drop six new products in the lead up to Black Friday to maintain cut through with audiences at a time when everyone is competing for eyeballs,” Begala explains. “We are staying in our own lane and doing things the way we want to, not the way everyone else does.”

• This story was originally published on Inside Small Business.