Black Friday Looks Like the Latest Victim of the Internet's Disruptive Power

It appears that the convenience of online ordering and free shipping are reducing the allure of scenes like this from Black Friday.

As the following article explains, it took Walmart 13 years to grow to $100 billion in sales. It took Amazon just 7 years to accomplish the same feat. JL


Tom Stevenson reports in The Telegraph:

Sales on Black Friday and its online adjunct, Cyber Monday, peaked in 2012 at around $60bn  in the US. Last year they were just $51bn despite the plunge in the oil price which should have given a boost to the US consumer. (A) curious feature of  third-quarter earnings  was the apparent contradiction of rising consumer confidence but profit warnings from retailers such as Nordstrom and Macy’s.

Perhaps we should blame FDR. Retailers persuaded the US president to shift Thanksgiving forward a week in 1939 so the new breed of consumer could fit in another week of spending before Christmas. He would have been appalled if he’d lived to see the orgy of consumption his decision has led to.

It took 70 years for Black Friday to cross the Atlantic so we could take part in the ghastly demonstration of greed and bad manners on the day after Thanksgiving. Fortunately, I don’t think this ugly import will be with us for long.

Black Friday looks like being the latest victim of the disruptive power of the internet. Sales on Black Friday and its online adjunct, Cyber Monday, peaked in 2012 at around $60bn (£40bn) in the US. Last year they were just $51bn despite the plunge in the oil price which should have given a boost to the US consumer.

One of the curious features of the recent third-quarter earnings season in America was the apparent contradiction of rising consumer confidence but a string of profit warnings from retailers such as Nordstrom and Macy’s.

In part, this reflects unseasonal warm weather and consumers taking a temporary breather while they rebuild their balance sheets. The optimistic view is that they’ll be back once they’ve refilled their savings accounts.
Actually, something more profound may be under way. I’ve written before about the different aspirations of the millennial generation. These under-35s were brought up in the consumerist high-water period between the 1980s and the financial crisis but are now looking for something more meaningful than a trip to the mall.
I would not overstate the case for consumers arriving on a new spiritual plain of simple living, however. There has been a complete revolution in the way we shop. In 2002 Walmart was responsible for 25pc of American retail sales growth.
In the past three years it contributed less than 10pc. Now look at Amazon. From a standing start it now accounts for nearly 40pc of the rise in America’s retail sales.

Wells Fargo Securities made one other interesting observation. It took Walmart 13 years to grow its sales from $10bn to $100bn between 1987 and 2000. For Amazon, the same progress was achieved in just seven years between 2007 and 2014.
It is perhaps unsurprising that Thomson’s fund has Amazon as its biggest holding. For a global fund manager, he has a very heavy tilt towards the US and to consumption-related stocks – Visa and Mastercard are also among his top 10 investments.
There are three clear investment lessons for me. First, some trends are unstoppable and long-lasting. You do not have to be in at the beginning to make money from good insights because they can play out over years. Since the end of 2008, Amazon’s shares have risen 15-fold.
Second, investment is just as much about knowing what not to invest in as what to buy and hold. Over the past year, while the Amazon share price has doubled, Walmart’s has fallen by a third.
Third, things never work out quite how you expect. When the internet grabbed investors’ attention 15 years ago, we all believed the disruption would be bad news for established brands and an unprecedented opportunity for challengers.
In fact, it has simply created new quasi-monopolies and shored up existing ones – if you are hooked into Amazon Prime’s free, next-day delivery, why would you even think about battling the Black Friday crowds.