Black Friday 2020: Retail Stocks Rally as Online Shopping Soars

As more customers continue to shop online, the COVID-19 pandemic seems to have reshaped the holiday shopping season significantly. Let’s take a look at how Black Friday and Cyber Monday impacted retail stocks this year. 

The COVID-19pandemic has reshaped the holiday shopping season this year, with fewer people visiting the stores on Black Friday. However, this didn’t stop enthusiastic shoppers from filling up the virtual carts. According to Adobe AnalyticsOpens a new window , the Black Friday online sales hit a new record, with consumers spending about $9 billionOpens a new window on U.S. retail websites. This online shopping traffic amounted to about a 22% increase over the previous year’s record of about $7.4 billion.

These record-breaking numbers made Black Friday 2020 the second-largest online spending day in the history of the U.S., just behind Cyber Monday 2019. If the current trend continues, Cyber Monday 2020 will witness the largest COVID-19 sales than ever before. This spending is expected to reach between $10.8 billion and $12.7 billion on Cyber Monday. The retail market will thereby see an overwhelming growth of 15% to 35% this year compared to the previous year. 

With people turning to online shopping for the most-basic commodities like groceries, the slated growth is not surprising. Online grocery shopping on Black Friday surged 397% compared to October daily averages, sales of personal care products skyrocketed by 556%, while the online spending for pet products rose by 254%

Taylor Schreiner, director at Adobe Digital Insights, told CNBCOpens a new window , “New consoles, phones, smart devices and TVs that are traditional Black Friday purchases are sharing online shopping cart space this year with unorthodox Black Friday purchases such as groceries, clothes, and alcohol, that would previously have been purchased in-store.”

On average, consumers spent about $6.3 million per minute online, or $27.50 per person, on Black Friday. The data highlighted a 25.3% increase in smartphone spending, representing 40% of the total ecommerce spending. 

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Large Retailers: Winners of Black Friday 2020

According to Edison TrendsOpens a new window , Target’s online sales in the U.S. were up 156% year over year for November, heading through the Black Friday weekend. The retailer thereby surpassed its competitors Walmart, Etsy, Best Buy, Amazon, and eBay in terms of growth. Walmart, the second-ranked retailer in the race, saw an increase of 120% between November 1, 2020 and November 24, 2020. 

Big retail giants such as Walmart and Target benefited from the online shopping spree this holiday season. Online sales at big stores surged by 403% on Thanksgiving and Black Friday against their October average. Small retailers also saw an upsurge, where sales grew by nearly 349%.

Retail Stocks Rally as NRF Stays Optimistic About Holiday Sales

Retailers could end up on a high in 2020, despite all of the COVID-19 challenges that the retail industry has dealt with, according to a new forecast by the National Retail FederationOpens a new window that cites a strong stock market, rising home values, and record personal savings rates as factors responsible for the rise in spending this holiday season. 

On November 23, 2020, the NRF reported that it expects holiday sales during November and December to rise between 3.6% and 5.2% year over year, which could amount to anything between $755.3 billion and $766.7 billion.

NRF Holiday Spending Forecast
Source: U.S. CensusOpens a new window

Note: The NRF forecast is based on an economic model that uses various markers such as employment, wages, consumer confidence, disposable income, consumer credit, previous retail sales, and weather. Further, NRF defines the holiday season as of November 1 through December 31.

As the shares of retailers Gap, Express, Nordstrom, Macy’s, Kohl’s, and mall owner Simon Property Group continued to rise through the last week, investors anticipated that consumers would soon be more open to returning to stores and spending more money on apparel and accessories. However, online sales continued to dominate Black Friday. Regardless of the online sales activity, the retail stocks rallied during the holiday seasonOpens a new window , where Macy’s stock price rose by 15%, Nordstrom stock rose by 10%, and Kohl’s and Abercrombie & Fitch shares gained 7%.

“The outlook for the holiday season is very bright,” NRF President and CEO Matt Shay said during a call with members of the media. “We’ve seen that consumers are very engaged [and] looking for opportunities to celebrate. We expect a strong finish to the season.”

Before the pandemic set in, there was a clear division between essential retailers like Target and Walmart and non-essential retailers like Macy’s and Gap. The latter were forced to shut down, while retailers that sold essential items like groceries and household cleaning supplies were allowed to remain open. After observing this, NRF and its retail members have been trying to influence state authorities to ensure that such distinction is not pre-decided or made again.

“No retail business is built to be closed,” Shay said. “And so, just arbitrarily saying you’ve got to be closed — that clearly was in some ways the hand of government tilting the scales of the marketplace against one category of business in favor of another under the guise of public health. We have been calling on state and local governments really to focus on the ways in which we’re doing things safely, not focus on products.

Local and state government authorities are the ones implementing pandemic safety measures. As a consequence of this, retailers are restructuring their regulation rules from store to store. Many in the retail industry hope that widespread vaccination will put an end to these restrictions and open the economy once again.

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In Conclusion

Black Friday 2020 was all about social distancing norms and less in-store traffic. The much-awaited holiday season was different both structurally and visually. However, online shopping ensured that consumers were not left out from emptying their pockets. Retailers of all kinds, small or big, have emerged as winners this season, as retail stocks continue to rally through this holiday season 2020. 

Do you think retail stocks will continue to soar post-pandemic? Comment below or let us know on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We’d love to hear from you!