Happy Friday. A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here.
Black Friday is here, and you know what that means: the holiday shopping season is in full swing. Retailers are under even more pressure than usual. With six fewer shopping days this year between Thanksgiving and Christmas, the clock is ticking for stores to get customers through the door.
The stakes: To understand why December matters so much to retailers, just look at the numbers. Last year, Target brought in 30% of its annual revenue during the fourth quarter, according to data compiled by Cowen. Macy’s and Kohl’s both collected 34% of their revenue during the quarter.
Of course, for retailers, these are no ordinary times. Consumer spending remains strong, but there are other forces at play.
Just look at this piece from my CNN Business colleague Paul R. La Monica, who writes that mall owners are finding creative ways to fill vacancies:
“The giant spaces that once housed a single anchor tenant are being reconfigured to attract multiple smaller shops. Empty stores are being filled with new kinds of tenants — hospital offices, pop-up shops for digital brands and even sports centers.”
Some choice tidbits: A Sears in Ohio is being demolished and replaced by an indoor golf center, while a Barney’s in Arizona now houses co-working space and an Apple Store.
A personal favorite: Mall owner Macerich has launched a program called BrandBox that works with e-commerce companies to set up physical pop-up stores.
It’s a creative strategy, but doesn’t change that fact that people are increasingly comfortable shopping online — particularly on their phones. Per Cowen, 50% or more of digital traffic during the holidays is expected to come from mobile, which is forecast to drive 30% to 35% of online revenue. Happy scrolling.
US law complicates trade talks
President Donald Trump’s decision to sign legislation in support of Hong Kong’s pro-democracy protesters this week isn’t likely to derail US-China trade talks — but it will complicate negotiations said to be at a crucial juncture.
Trump, eager to reach a deal, tried to couch the move, which had overwhelming support from US lawmakers. He said he had signed the bill “out of respect for President Xi [Jinping], China, and the people of Hong Kong.”
China responded by summoning the US ambassador. Beijing said Thursday that the signing of the Hong Kong Human Rights and Democracy Act was “plainly bullying behavior” and was “opposed by the Chinese government and Chinese people.”
Investor insight: UBS said in a note to clients Friday that it doesn’t think the legislation will “significantly” alter the state of play.
The bank’s strategists noted Trump’s “conciliatory tone toward China when signing the legislation, signaling an intent to continue cordial trade negotiations.”
But it’s still a complicating factor in an already complex process. From analysts at Commerzbank: “Obviously, the Hong Kong bill could create another obstacle for the already struggling negotiation process.”
The grocery delivery wars are heating up in Asia
The fight to get out front on grocery delivery looks increasingly global. See here: Japanese retail giant Aeon is teaming up with UK grocery delivery company Ocado (OCDDY) in a move that signals it wants to take on both Amazon (AMZN) and Walmart (WMT).
Shares of Ocado jumped nearly 13% in early trading in London. They’ve skyrocketed more than 70% this year. Other notable Ocado partners include Kroger, which signed an exclusive deal to use Ocado’s technology in the United States last year, and UK high street mainstay Marks & Spencer.
Aeon will utilize Ocado’s system of robotic warehouses and its software to compete in an increasingly cutthroat sector. Walmart and Rakuten, Japan’s largest e-commerce company, launched a grocery delivery service in Japan in 2018. Amazon is also pushing into fresh food delivery in the country.
It’s a half day of trading for US equity and bond markets. Time to tuck in to those Thanksgiving leftovers.
Coming next week: Saudi Aramco sets the final price for what’s poised to be the largest IPO of the year, if not ever.