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Online stores the biggest winner on Black Friday, but new legislation may threaten revenue gains

Retailers across the United States rejoiced as shoppers flooded into stores and logged on to digital marketplaces in droves. According to a report from Reuters, sales numbers during the first few hours were more than 25 percent higher than they were just a year ago. The strong sales numbers are leaving merchants cautiously optimistic as the holiday shopping season begins in earnest.

“Overall, Black Friday doesn’t have the sense of urgency as in the past and feels more like a busy regular weekend day in many of the stores,” said Telsey Advisory Group’s Dana Telsey during an interview with Reuters. “Many of the promotions were available for the past couple of weeks. We haven’t noticed desperation from any retailer.”

Unfortunately, retail giants like Target and Macy’s suffered a decline in stock price by Friday’s close. This loss spread to other sectors and pulled the markets down by the end of the day. Smaller stores like American Eagle and Victoria’s Secret finished the day close to even, but some experts are worried that the sales numbers may have peaked earlier in the year.

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Retailers across the United States rejoiced as shoppers flooded into stores and logged on to digital marketplaces in droves. According to a report from Reuters, sales numbers during the first few hours were more than 25 percent higher than they were just a year ago. The strong sales numbers are leaving merchants cautiously optimistic as the holiday shopping season begins in earnest.

“Overall, Black Friday doesn’t have the sense of urgency as in the past and feels more like a busy regular weekend day in many of the stores,” said Telsey Advisory Group’s Dana Telsey during an interview with Reuters. “Many of the promotions were available for the past couple of weeks. We haven’t noticed desperation from any retailer.”

Unfortunately, retail giants like Target and Macy’s suffered a decline in stock price by Friday’s close. This loss spread to other sectors and pulled the markets down by the end of the day. Smaller stores like American Eagle and Victoria’s Secret finished the day close to even, but some experts are worried that the sales numbers may have peaked earlier in the year.

However, while US markets finished in the red, all news is not doom and gloom. Total online sales for Black Friday ‘18 are expected to surpass last year’s level by several billion dollars. Online sales on Thanksgiving Day came close to four billion dollars just on its own. With online retailers performing well on Friday, some predict that Cyber Monday sales will break records. Many traditional brick and mortar stores also hold online sales events over the weekend and into Monday, and it’s possible a strong weekend sales event will push the price of shares back up.

Although online shopping has been gaining in popularity for several years, new legislation that went into effect this year may threaten to dampen revenue growth. According to a report from CBS, a judicial ruling this summer allowed states to require online stores to collect sales tax, eliminating one of the advantages of shopping online. Several large digital sellers have already begun charging new fees, and it’s likely the practice will eventually spread to all e-commerce. Shoppers in “Alabama, Illinois, Indiana, Kentucky, Maryland, Minnesota, Nevada, New Jersey, North Dakota, Washington, and Wisconsin,” are already paying the extra tax, and more will go into effect January 2019 in six additional states.

Across the Atlantic, Black Friday sales were down compared to last year throughout the UK. Britain’s largest credit card administrator, Barclaycard, reported a 12 percent dip compared to 2017; however, the number of individual transactions was significantly higher. According to a report from Reuters, many consumers are hesitant to drop a significant amount of cash on luxury items while the Brexit deal remains undecided. That doesn’t mean people in the UK aren’t buying things, they’re just buying more gifts that are less-expensive.

“This suggests that, while Black Friday is clearly encouraging shoppers to buy, consumers are more likely to be purchasing smaller ‘treat’ products, rather than splashing out on high-end items,” said Barclaycard’s managing director Konrad Kelling while speaking to Reuters.

About Joseph LaFave View All Posts

Joseph LaFave writes about finance, maritime issues, healthcare, the National Guard, and conflicts around the world. Before becoming a journalist, he worked as an EMT in Florida and as an ESH engineer for Lockheed Martin supporting several DoD and NASA satellites. He holds a Bachelor of Science degree from Florida State University and a Master of Science in Management from Southern New Hampshire University.

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