Economic Growth Drove Black Friday


The Black Friday season has long been the busiest shopping day of the year, and 2017 was no different. In the world of video games, we saw numerous success stories. All three major consoles benefited greatly from Black Friday. A lot can be said about the Nintendo Switch’s demand or Sony’s aggressive doorbuster deal. However, this Black Friday was a result of the US Economy.

From CNN Money

American shoppers spent a record $5 billion in 24 hours. That marks a 16.9% increase in dollars spent online compared with Black Friday 2016, according to data from Adobe Digital Insights, which tracks 80% of online spending at America’s 100 largest retail websites.

Now, some of the increase in was due to a move from brick and mortar stores to online; however, foot traffic on Black Friday declined only about 1-2 percent. Foot-traffic declined due to stores being closed on Thanksgiving. Nevertheless, the improvement in online spending makes up for less foot traffic.

Cyber Monday (the Monday after Thanksgiving) also saw a major increase in spending

Adobe (Nasdaq:ADBE) today released its 2017 online shopping data for Cyber Monday and the holiday weekend overall. Cyber Monday is projected to hit a new record as the largest online sales day in history with $6.59 billion by the end of the day. This marks a 16.8 percent year-over-year (YoY) increase as of 10:00 p.m. ET. In comparison, Black Friday and Thanksgiving Day brought in $5.03 billion and $2.87 billion in revenue respectively. Top sellers on Cyber Monday included the Nintendo Switch, PJ Masks and Hatchimals & Colleggtibles figurines, Apple AirPods, streaming devices like Google Chromecast and Roku, and Super Mario Odyssey, the video game. The holiday shopping season so far (November 1 to 27) drove a total of $50 billion in online revenue, a 16.8 percent increase. Adobe predicts this will be the first-ever holiday season to break $100 billion in online sales.

What is causing this massive increase in consumer spending? It’s the Economy (stupid)

Here is the US GDP growth rate (by quarter) over the last two years

Here is the GDP growth rate for the last 5 years. noted that the US economy grew 3 percent in the third quarter of 2017. They added that this is the highest it has been since 2014. Although 2014 saw growth of over 5 percent in a quarter, it preceded a decline the quarter prior. This overall improvement in the economy can be seen in the stock market which has soared throughout 2017. Heck, the stock market continued to rise even during Black Friday. Given the information I posted above, Q4 of 2017 will also be up.

The huge spending during Black Friday was definitely driven by the economy. Thus, the massive success of the video game systems too was due to the economy. Business Insider notes that Nintendo Switch was one of the most successful products on Black Friday despite not having a discount. Adobe Digital Insight, which tracks 80 percent of online sales, noted that Nintendo Switch was the best selling video game console throughout the buying season. It was even the best selling product on Thanksgiving, Black Friday and Cyber Monday. Again, Nintendo Switch sold without a price cut.

Sony, too, benefited as the brand had its strongest Black Friday in 22 years. Now, PS4 had some massive discounts ($199 for the 1TB model) which helped sales. Nevertheless, I don’t think Sony’s Black Friday would have been this good without the improving economy. PS4 has done well this year at least matching 2016 in terms of performance. I say an improving economy certainly contributed to this.

Even Microsoft saw the economic benefits as well. According to Forbes, XBone One has sold through most of its shipments. Analyst firm IHS Markit increased its sell-through estimate from 500,000 to 900,000. He states “At this level, Xbox One share of total Q4 2017 Xbox One console family sales will be close to 20 percent, similar to the performance of PS4 Pro at launch. If Microsoft outperforms and delivers sales in excess of this forecast it will be considered a major launch success.” While this may not seem like much, remember that XBone One X retails for $499. A premium product like XBox One X couldn’t succeed if

All three major consoles saw success during this year’s frantic buying season. I expect the economy is contributing to these success stories. When the NPD results show massive increases in software and hardware spending, you’ll know who to blame.

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