11/27 Daily Market Note: Black Friday Retail Sales continues to keep the VIX Fear Gauge low. Are we entering an era of Low Volatility?
11/27 Premium Strategy Note - Throw caution to the wind?
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Hey Folks -
The U.S. retail sector experienced a notable shift in consumer spending habits during this Black Friday in 2023, with online sales reaching a record $9.8 billion, marking a 7.5% increase from the previous year. This growth was primarily fueled by deep discounts and the continued popularity of flexible payment options like buy now, pay later (BNPL) services, which saw a 72% surge in usage. Total global online sales tallied at $70.9 billion, with an impressive 79% of all shopping traffic conducted on mobile devices. Despite a sluggish overall retail growth of just 2.3% in the last quarter compared to the same period the previous year, the spike in Black Friday sales brought a sense of optimism, particularly against the backdrop of economic uncertainties and a decrease in inflation to just over 3%, down from over 7% the previous year.
Slow growth was initially projected by Salesforce, which anticipated only a 1% increase in online sales for November and December, the slowest in at least five years. However Black Friday broke this projection, with Adobe’s analytics noting a 7.4% increase in online sales, driven largely by significant discounts on various products.
Additionally, there has been a clear shift in consumer behavior with a stronger focus on online shopping and price-consciousness. E-commerce sales on Black Friday rose by 8.5% YoY, while in-store sales saw a more modest increase of 1.1%. This trend aligns with the broader movement towards digital shopping platforms, evidenced by smartphones accounting for $5.3 billion in sales on Black Friday, a 10.4% increase from 2022, and comprising 54% of all online sales. The increasing dominance of mobile sales, expected to surpass desktop PC sales this holiday season, shows a significant shift in consumer behavior and retail strategies.
According to investment bank Stifel, brand and retailer checks reveal a promotional environment similar to 2022, with increased promotions observed primarily in brands associated with cold weather merchandise (such as Columbia Sportswear and The North Face) and businesses focusing on inventory rationalization. The 2023 holiday season, benefiting from an extra weekend shopping day, is expected to maintain a promotional tone, though consumers may shop later in the season in search of the best deals.
I participated in some Black Friday shopping myself, and I can safely say that certain retailers definitely saw intense foot traffic because of very aggressive promotional strategies. Shared this on Twitter below (make sure to follow me!)
Below I’ll lightly touch upon positioning opinions that I currently have.