Cyber Week Spending Confirms Our Rationale for These Holdings
Digital shopping thrives as consumers shop for deals and leverage AI. Here's what stood out to us.
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If you glance at your email, odds are you are seeing a continuation of holiday shopping deals from what is now referred to as “Cyber Week” shopping. We’re still waiting for final figures through the end of Cyber Monday, but what we are seeing so far points to more of the same. By that, we mean consumers utilizing digital shopping and AI tools to seek out sales, deals, and other shopping sweeteners.
If you did any casual holiday shopping over the last few days, or something more aggressive, you know firsthand that there were deals aplenty. And consumers opened their wallets.
According to data from Adobe, U.S. consumers spent $11.8 billion online during Black Friday (up 9.1% year over year), $6.4 billion on Thanksgiving Day (+5.3%), and another $11.8 billion over the weekend. As of 6:30 PM ET Monday, Adobe found U.S. consumers had already spent $9.1 billion online for Cyber Monday, up 4.5% from the same day a year ago. But with online spending peaking between 8 PM and 10 PM, Adobe predicts the final tally for Cyber Monday will be $13.9 billion-$14.2 billion for the day. Tallying those figures, Cyber Week is expected to cross the $43 billion mark.
Imagine what those figures might have been if Shopify (SHOP) , which handles an estimated 10% of all U.S. e-commerce transactions, didn’t face an hours-long outage Monday.
Given the signals, recent comments from retailer management teams, and other data, we’re not surprised consumers embraced the volume of holiday shopping deals. Remember, though, the lingering question is what does that mean for retail margins? The argument that “we’ll make it up in volume” doesn’t always pan out.
Two Things That Stood Out to Us
In reviewing consumer shopping findings for the last few days, two other details stand out. First, there was the use of Buy Now Pay Later (BNPL).
Adobe found that consumer use of BNPL services rose 11%, year over year, on Black Friday, a tad faster than the overall gain of 9.1% we mentioned above. Adobe also found that between November 1-30, the use of BNPL in online shopping rose 9.6% year over year to around $9.0 billion. Odds are that was a quicker pace than the larger November spending increase compared to year-ago levels.
These figures and others like them indicate consumers are looking to stretch their spending dollars, and that reaffirms our thinking behind TheStreet Pro Portfolio holdings Costco (COST) and TJX Cos. (TJX) , as well as Amazon (AMZN) .
We see the indications above, as well as Costco’s positioning when it comes to fresh food and grocery, setting it up for another round of favorable comp sales when it delivers its November sales report after Wednesday’s (December 3) market close.
As the final Cyber Monday figures are posted, we’ll revisit what we’ve shared above, but odds are we won’t see any significant changes.
The second item that stood out, which we hinted at above, was the use of AI. Per Adobe, AI traffic to U.S. retail sites increased more than 800% year over year on Black Friday. Adobe also observed that shoppers who landed on a U.S. retail site from an AI service were 38% more likely to convert vs. non-AI traffic sources.
We’ll circle back on AI-related figures once we have the final Cyber Week spending data in hand, but what we see thus far supports our view that consumer adoption of AI will help drive network congestion, especially if holiday shopping usage drives greater consumer adoption and usage.
At the time of publication, TheStreet Pro Portfolio was long COST, TJX and AMZN.
