This year, spending online during Black Friday fell for the first time ever. AP
This year, spending online during Black Friday fell for the first time ever. AP
This year, spending online during Black Friday fell for the first time ever. AP
This year, spending online during Black Friday fell for the first time ever. AP

Business

Cyber Monday spending expected to slow as US shoppers see fewer deals

Shoppers also deterred by limited choices due to supply chain disruptions

Reuters

November 29, 2021

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US retailers' online sales are likely to have slowed this Cyber Monday, as fewer discounts and limited choices due to global supply chain disruptions deterred shoppers, but other data points suggested American consumers are still making purchases.

Retailers had also spread out promotional deals across more weeks to protect profit margins from surging supply chain costs and to better manage inventories amid widespread product shortages before the Christmas shopping season.

Those attempts have pinched sales on what are traditionally some of the biggest shopping days of the year, with Adobe Analytics data at the weekend showing spending online during Black Friday fell for the first time ever.

US spending on Cyber Monday is expected to be between $10.2 billion and $11.3bn, estimates from Adobe show.

That translates to roughly flat growth at the midpoint compared to last year's $10.8bn, which was a near 15 per cent jump from 2019.

Excitement on social media around Cyber Monday is also ebbing.

“Cyber Monday continues to be extremely relevant, particularly in the digital world, but the buzz has been more muted than we've seen in recent history,” said Rob Garf, general manager of retail at Salesforce.

Discount rates in the US in the week leading up to Cyber Monday were on average 8 per cent lower than last year, Salesforce said.

The holiday season kicks off right as the new Omicron coronavirus variant has triggered uncertainty over the economic reopening, but experts say it is too early to predict the impact on consumer spending.

On Black Friday, the day after Thanksgiving, US shoppers spent about $8.9bn online, down from $9bn a year earlier, the latest Adobe figures show.

A separate data point released on Monday by MasterCard SpendingPulse — which calculates overall US retail sales across payment methods — found US shoppers spent 14 per cent more on merchandise excluding cars from November 26 to 28, compared to the same holiday weekend a year earlier. The estimates include purchases made in stores.

Shopper spending online increased 5 per cent over the three-day period compared to a year earlier, and by 28.7 per cent when compared to the same period in 2019, MasterCard SpendingPulse reported.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Updated: November 29, 2021, 10:50 PM
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