How to Profit From the “Death” of Black Friday

An American tradition is dying… But a new one is taking its place…

For as long as I can remember, the Friday after Thanksgiving has been the biggest shopping day of the year. But I didn’t realize how far back the tradition went.

It goes all the back to 1924, when Macy’s hosted its first annual Thanksgiving Day Parade.

The day after the parade—when the stores reopened on Friday—owners saw a huge increase in shoppers… For almost 100 years since then, shoppers have filled stores on Black Friday.

Until this year…

That’s when the stores on Black Friday appeared empty. You can see the pictures of all the empty stores with one quick Google search.

A Target store in Brooklyn on Black Friday (Source: Business Insider)

I saw this firsthand myself on Friday afternoon. I went to an outdoor mall and Sam’s Club in South Florida. Both were surprisingly quiet. Others from our office found nearly empty Targets and Walmarts, too.

The mad rush on Black Friday to Best Buy and Walmart is waning.

But that doesn’t mean retailers are dying.

In fact, retailers are on pace to have the biggest holiday season ever.

Instead, “Couch Friday” and “Cyber Monday” have replaced the traditional start of the holiday shopping season. (It’s estimated that Americans spent $6.59 billion on Cyber Monday. That’s the largest digital shopping day in U.S. history.)

Here at the Daily, we dig beneath the headlines to see what’s really going on. And often, what we see is the opposite of what’s portrayed in the media.

Yesterday, I told you why the economy is doing great. More people are working now than ever before… And they’re making more than ever before.

And they’ll be spending all that money shopping at retailers (traditional and online) for the holidays.

In a moment, I’ll show you how to get in on this shopping spree…

More Holiday Shopping Ahead

According to the National Retail Federation, consumers will spend $682 billion this year. That’s up 4% from last year.

So, there won’t be fewer shoppers this holiday season. And they aren’t spending less.

They’re just changing the way they shop in two major ways: They’re going online… and starting their holiday shopping earlier.

First, the shift to online shopping is undeniable.

Rakuten Marketing is a leading analytics firm. It found online sales increased 21% over the Thanksgiving weekend compared to the same time last year.

The other change: Shoppers started earlier. Dedicated bargain hunters were out on Thanksgiving night scouting deals.

You see, this year, retailers opened their doors earlier to attract more shoppers.

JCPenney’s opened at 2 p.m. on Thanksgiving Day. Best Buy at 5. Target and Walmart at 6.

Reports show these stores had long lines on Thursday, which cannibalized traffic from Friday.

But if you count the visitors to stores, the numbers weren’t so bad, either.

ShopperTrak is another firm that tracks shopping stats. It estimated foot traffic in stores fell less than 1% this year.

Don’t believe the hype that brick-and-mortar retailers are dying.

There were more shoppers this Black Friday. They just started earlier and were spread out over more hours (including online shopping).

Use Fear of a Retail Apocalypse to Profit

All the talk about the “retail apocalypse” has pushed retail stocks down this year.

But here’s the thing… Retail is never going to go away.

People will always shop. But how they shop changes. And that will create new winners and losers. And right now, retail overall looks like a winner.

We told you on September 28 that retail was a bargain (and it still is). Since then, the SPDR S&P Retail ETF (XRT) is up 6%.

This trend is just getting started.

Retail is one of the cheapest sectors in the market. The price-to-earnings (P/E) ratio—how much investors are willing to pay for each dollar of current profits—is only 18

That’s compared to the average of 22 for the S&P 500. That means retail is trading at a 18% discount to the overall market.

Smart investors are starting to take notice. And they’ve driven prices up a little. But the masses haven’t caught on yet.

Investor sentiment is turning positive in retail stocks. And as it does, I believe XRT will retest its highs from 2015.

That implies a 15% rise from here. I think that’ll happen by the end of April when retailers have posted year-end results.


Nick Rokke, CFA
Analyst, The Palm Beach Daily


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