Black Friday: who benefits from the shopping bonanza?

UK shoppers are planning to spend an average of £224 each in this year’s Black Friday Bonanza, according to research from PwC* – 11% more than last year. And it appears there is a gender divide, with men prepared to spend a third more on treats for themselves, than women.

However, with research from consumer group Which?, suggesting that just one in twenty sale promotions are actually cheaper on Black Friday**, who is benefitting most – consumers or suppliers or even investors?

We take a look at four sectors that should benefit from increased sales:

1. Online retailers

Amazon, a top ten holding in Scottish Mortgage Investment Trust and AXA Framlington Global Technology funds***, is an obvious beneficiary of Black Friday – although last year it actually sold more on ‘Cyber Monday’. Billions of pounds worth of goods are bought on the online platform both here and in the US.

However, Amazon’s sales are dwarfed by Chinese peer Alibaba. The company saw $13 billion spent in the first hour alone of its ‘Singles Day’ sale earlier this month. Some $38 billion was spent in total or, in sterling terms, £500,000 per second across the day! Alibaba is the largest holding*** in Invesco China Equity and is also in Fidelity China Special Situations’ top ten***.

2. Big brands

Whether it’s a big TV, a new handbag or a designer dress, the big brands also do well in the sales as big discounts often attract customers who may otherwise not be able to afford the goods.

Samsung, a top ten holding*** in Schroder Asian Alpha Plus and T. Rowe Price Global Focused Growth Equity, is one example of an electronics giant that attracts the bargain hunters. Nintendo, a holding in Baillie Gifford Japanese^, is another – particularly for parents looking to buy a cheap ‘Switch’ for Christmas.

When it comes to luxury items, LVMH, a top ten holding in BlackRock European Dynamic, is ‘must’ for shoppers. From Tag Heuer watches to Bulgari bags and new acquisition Tiffany, there are plenty of top-end items from which to choose. For the fashionistas, Ted Baker, a holding^^ in BMO Global Smaller Companies trust, may also be of interest.

3. Mobile payments

Another aspect, of course, is online payments: all those purchases have to be paid for.

Rathbone Global Opportunities is a great example of a fund investing in this area.

Manager James Thomson holds a number of companies in the payment network in his top ten*** – PayPal, Mastercard, Visa and Global Payments – a merchant acquirer. Most people will have heard of the first three, and will know that they make a charge when their payment systems are used. A ‘merchant acquirer’ just used to supply ‘dumb’ terminals, but now they are wrapping value around their transactions and can be used in infantry systems, scheduling software, accounting software, etc – so they are now a real service for businesses.

Brown Advisory Global Leaders is another fund favouring online payments, with Visa and Mastercard also in its top ten holdings***.

4. Logistics

And finally, there’s logistics. If you’ve been sitting in the comfort of your own home or office making your purchases, someone then has to deliver them to you. Amazon of course organises its own deliveries. Yodel is privately owned and Royal Mail doesn’t seem to be a popular choice among Elite rated managers.

However, TIME:Commercial Long Income fund owns*** the DHL premises in Manton Wood and DPD in Tipton. The former is the DHL Supply Chain campus for the East Midlands region and lies within 2 minutes of the A1 and 15 minutes of junction 31 on the M1. The latter is a new parcel delivery centre, which was given the go-ahead last year.

*Source: Which?, based on the 83 products on sale on Black Friday 2018, whose prices were tracked six months before and six months after the sales ‘bonanza’.
**Source: PwC, 20 November 2019, online survey of over 10,000 adults from the UK, Ireland, South Africa, Germany, the Netherlands and France.
***Source: fund fact sheet, 31 October 2019
^Source: FE Analytics, full holdings as at 31 August 2019
^^Source: fund presentation as at 30 September 2019