Sam Dickie: Fisher Funds expert on the evolution of Black Friday

The year is drawing to a close and Christmas is on the horizon - meaning Black Friday is nearly upon us.

The shopping event began as a one-day sale for American consumers the day after Thanksgiving, but it has since expanded around the world.

Fisher Funds expert Sam Dickie examined the history of the sale - and revealed what consumers can expect this year.

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Episode Transcript

Speaker 1 (00:00):
Together do to see.

Speaker 2 (00:01):
Alan San dickeya Fisher Funds is with us right now.

Speaker 1 (00:03):
Hey, Sam, here there you day.

Speaker 2 (00:05):
Hey, so we've got Black Friday sales already in full swing.
I want to know, I want to know what you're
reckon about Black Friday? Are you getting involved in this?

Speaker 1 (00:13):
Not for me, but I mean it's really expanded.

Speaker 3 (00:17):
I mean it started off as a one day sale
in the US the day after Thanksgiving. It has expanded
around the world, and China in particular is taken to
the next level. So they've got Singles Day, they've got
six one eight, which is a mid year sale. They've
got twelve twelve, which is a year in clean clearance sale,
they got a Chinese New Year sale, a Woman's Day sales, so.

Speaker 1 (00:35):
They've gone a bit crazy with it.

Speaker 3 (00:36):
But retail revenue on these sales days is usually many,
multiple times the size of.

Speaker 1 (00:41):
A normal October shopping day for example.

Speaker 2 (00:43):
For Black Friday to work, obviously, you need to have
consumers to actually have money. But do global consumers actually
have enough money this year?

Speaker 1 (00:52):
Yeah? They do actually, So let's take retail sales. The
proxy is a start.

Speaker 3 (00:56):
So US retail sales are growing three percent Europe's help
healthy too, But the standout is actually China. Again, retail
sales growth had been running around two percent earlier in
the year, but remember we spoke a few weeks ago
about that big stimulus package and the consumers responded, so
that retail sales in China now has grown about five percent,
so they had direct stimulus like tax cuts for example.

(01:18):
Back home here, the New Zealand consumers still shrinking slightly
as we know, but there is a forward looking indicator
people focus on, which is consumer confidence, and US and
Aussie consumer confidence as it as sixteen month high and
even New Zealand consumer confidence is picking up, so that's positive.
And the other really important thing is the consumer balance

(01:39):
sheet around the world, and particularly in a place like
the US, is actually a lot healthier than it's been
in many years. So take US household debt to GDP
for example, that's the lowest it's been in fifteen years.
So when we hear about stretched balance sheets around the world,
it's actually governments that have stretch balance sheets, not the consumer.

Speaker 2 (01:57):
Interesting, now, does this I mean it's very competitive out
there for the retailers. Does this kind of thing benefit
the big players, make them get bigger.

Speaker 1 (02:04):
It does, It really does.

Speaker 3 (02:05):
So if you take take the US again, you know
players like Walmart, Amazon, Costco, So, Target, and Boots Walgreens.
They account for over a trillion dollars in sales, or
twenty five percent of US retail sales.

Speaker 1 (02:20):
So four or five players are.

Speaker 3 (02:22):
A quarter of total sales, and they all continue to
grow faster. Not so much Target, by the way, but Walmart, Amazon,
and Costco continue to grow faster than the overall system,
so they continue to take that market share.

Speaker 2 (02:34):
What does this mean do you think for consumers?

Speaker 1 (02:36):
Then?

Speaker 3 (02:38):
I think it's it's on the face of it's good news.

Speaker 1 (02:42):
So why are these guys growing faster.

Speaker 3 (02:44):
They're using their economies of scale to negotiate with suppliers,
so they get cheaper costs and they pass that on
to consumers in the form of cheaper prices. So Costco,
which has got its west Auckland store, is a great example.
So their mantra when you go and meet management, or
they go into any strategy meeting or they have any
board meetings, they never talk about how they can take
more margin out of us as consumers or more profit.

(03:06):
They always talk about how they can drive lower prices
for us. So because of that, and that's actually called
scale economy shared by the way, because of that, every
time they get a little bit bigger, they recycle that
those profits into lower prices for us, which means they
garner more of our wallet. And that's why the west
Aukland store is booming. So that's good news, right, So

(03:27):
that these big guys are very efficient at driving down
the price.

Speaker 1 (03:32):
Of goods, then we should benefit as consumers.

Speaker 2 (03:33):
Yeah too, right, what about investors? I mean, does this
mean you need to back the big guys?

Speaker 1 (03:38):
I think so. So a few things to bear in
mind there.

Speaker 3 (03:39):
So Black Friday itself can give us a early hint
on how bullish we're all feeling around the world as
consumers heading into Christmas. That keep Christmas period. This is
sort of a one day sneak peek of that. The
second thing is these big retailers are consolidating market share
and the smaller retailers are struggling. So I guess when
you're thinking about that, there's a lot of very cheap

(04:01):
looking from a a price to Earninge's basis small retailers
around the world. But just be careful that the big
guys continue to do well. And you see that in
this year prices so Walmarts up seventy five percent, year
to day cost goes up another fifty percent, and as
it Amazon's up forty percent.

Speaker 1 (04:15):
So it does seem like the bigger getting bigger.

Speaker 2 (04:17):
Interesting. Hey Sam, thank you so much as always, talk
to you again soon that Sam Dickie Official refunds.

Speaker 3 (04:23):
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