More than half of small businesses (58%) say Black Friday has overtaken Boxing Day as Australia’s biggest sales event, yet fewer are participating in 2025, citing affordability concerns in a tough economic climate, according to new research from global small business platform Xero.
While consumer appetite for bargains continues to grow, small businesses are increasingly struggling to keep up. The survey of 500 Australian small businesses revealed almost two-thirds (64%) feel the pressure to compete with big brands during Black Friday, up 4% year-on-year. These competitive dynamics are shaping not just whether small businesses take part, but also how they price their products and services during the sales period.
Participation drops amid cost concerns
This year, fewer small businesses are opting into Black Friday, with just 39% committing to definitely taking part, down by 22% since 2024. Many are stepping back due to cost pressures, with nearly a third (30%) saying they can’t afford to offer discounts, while a quarter (25%) believe their customers will support them regardless.
For those planning to participate, expectations are mixed. One in 10 are bracing for a potential drop in sales, highlighting the growing challenge of competing with major retailers. However, more than half (57%) anticipate a sales lift compared to previous years. This, on average, is modest at an 18% increase.
“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,” said Angad Soin, Global Chief Strategy Officer and Managing Director AU/NZ and Global Chief Strategy Officer at Xero. “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.”
Mixed expectations and evolving motivations
The drivers for small businesses to engage with Black Friday are evolving. This year, of those participating, 59% say they’re doing so to attract new customers, up from 48% in 2024, while 45% cite building customer loyalty as a key motivator. This is not without hesitations, with 40% concerned about the toll on 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 . 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,” Soin said.
“Small businesses are the heart of our communities and the backbone of our economy, and I strongly believe in supporting local. I encourage all Australians to get behind their favourite small businesses where they can, not just during Black Friday, but throughout the year.”
To help small businesses prepare for and manage the Black Friday period, there are a number of digital tools they can utilise such as Xero Analytics, which provides real-time insights into cash flow and performance. Additionally, Xero’s integration with inventory management platforms like Cin7 can also support businesses to streamline operations and make smarter stock decisions, which is key ahead of peak sales periods like Black Friday.