With Christmas reasonably comfortably far away, consumers may find time over the next week to seek out some bargain purchases for themselves, as well as others. Whether it’s the latest phone, tablet or smartwatch you’re after, Black Friday sales events may provide a good buying opportunity.
Except, there is a problem with that. One of the inescapable aspects to the string of retail failures we’ve seen recently in the UK has been the mounting evidence that some consumers have grown weary of consumer goods. From a previous generation smartphone or 4K OLED TV that works just fine, to a bulging wardrobe of new clothes, there are plenty of reasons to sit out the sales.
Of course, there’s always a market for the latest technology – especially among millennials – I’m told. Even for them though, there’s a problem. Offline experiences with friends, concerts, social events, athletic pursuits and so on – we all have friends and relations that fit the profile – are increasingly taking the place of goods as the perceived best way to spend cash1.
The big positive for retailers on both sides of the Atlantic is that unemployment is low and wages have been rising faster than inflation for some time. In the US, a presidential election due late in 2020 suggests the economy won’t be left to fend for itself.
In Britain, there’s more economic uncertainty, especially with wildly divergent election outcomes still possible in three weeks time. Last year, Black Friday UK was a win for Amazon and online retailers generally – as it was in the US – but in-store spending proved a disappointment2.
The big question this year, therefore, is will British consumers shrug off a lack of economic and political clarity with some good, old fashioned retail therapy? Answers we shall know in a few weeks. Undoubtedly, there will be money to be made for manufacturers and retailers positioned the right way though.
The National Retail Federation has it that 165 million Americans will go shopping from Thanksgiving this coming Thursday through Cyber Monday (2 December) with 65% doing so to take advantage of deals and promotions3.
Online strategies will be important. With years of data now behind them, retailers have the opportunity to repeat successful formulas, plan their offers and up-sells, and chase those all important abandoned online shopping carts. However, product/price will remain king.
Apple will be hoping its devotees will splash out on new phones and its growing portfolio of wearable products like Apple watches and AirPods – wireless, noise cancelling in-ear headphones for those, like me, on the cusp of such things.
Retailers like Walmart and Amazon will be helping Apple along, of course, with their usual Black Friday deals. Just in case you missed it, 2019 has already turned into a great year for Apple Inc., now with a stock market value of US$1.2 trillion4.
Incidentally, Adobe Analytics, which uses artificial intelligence and machine learning to extrapolate past trends in retail, is expecting smartphones to account for 36% of all online sales in the US this holiday season.
Other products it highlights as possible winners include game consoles such as the Nintendo Switch Lite and SEGA Genesis Mini, toys like Owleez, Blume Dolls and Candy Locks, along with video games including Pokémon Shield/Sword5.
Technology products in focus broadly seem to match those on sale in the US – rarely discounted AirPods, for example, along with smart phones and watches from Apple, Samsung and Fitbit – all essential adornments for those nights out with millennial friends. Nintendo’s Switch and Switch Lite make multiple appearances again too6. You’re getting the picture, I guess.
Quite a number of funds on Fidelity’s Select 50 list have a consumer growth theme running through them, whether that’s related to new products gripping shoppers in the developed world or, in emerging markets, growth in consumerism more generally.
Exposures to both domestic and world consumers can be found, for example, in the Rathbone Global Opportunities Fund (Amazon, MasterCard, PayPal) and the JPM US Select Fund (Amazon, Apple, Coca-Cola). Nintendo is currently one of the largest holdings in the Lindsell Train Japanese Equity Fund.
1 Eventbrite and Harris, January 2019
2 RealBusiness, 26.11.18, and Bloomberg, 27.11.18
3 NRF, 15.11.19
4 Bloomberg, 19.11.19
5 Adobe Analytics, 29.10.19
6 Tech Radar and BlackFriday.co.uk, 19.11.19
Important information: The value of investments and the income from them can go down as well as up, so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. Select 50 is not a personal recommendation to buy or sell a fund. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.
What you could do next
Stay up to date with market data
Get the latest share prices, market data, news, factsheets and performance charts for FTSE companies.
Look for opportunities
Search through the thousands of investments we offer with our powerful investment finder tool.
Understand the investment landscape
Watch Tom Stevenson's analysis of the global markets and key asset classes for the next 12 months.