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Investors Must Focus on Big Picture on Black Friday

The stores were crowded. At (some store) in (some town) a fistfight broke out over (this year’s hot gift).  At the (some name) mall in (some other town), (something crazy happened).

There is a predictability to Black Friday stories each year, yet there also is a predictability to what they tell us about how stores will do over holidays—not much. A lot of things can happen between Thanksgiving and Christmas, and they usually do.

In fact, the read from Black Friday may be even less useful than usual this year. Retailers are looking a little less promotional than usual for the long Thanksgiving weekend. That probably counts as a good thing. Conditioning shoppers to expect discounts just as the holiday shopping season gets under way doesn’t do wonders for profit margins.

What we do know is that consumers are in good shape going into the holidays. Unemployment is low and debt levels are manageable. One sticking point is that the personal saving rate has fallen, and people will need to spend less to build it back up—but that is probably more of a story for next year.

Spending should strengthen again this holiday shopping season. The big question is how it gets distributed—in other words, how big a bite takes of its competitors’ share this time around.

Retail stocks have been rallying, partly because investors were a little too dour heading into this month, but also because it does seem that stores like Wal-Mart, with its combination of e-commerce and brick-and-mortar offerings, are figuring out how to punch back against the online juggernaut.

Retailers probably only need to stanch some of their market share losses for their stocks to keep rallying.

Write to Justin Lahart at Markets

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