In one corner, the Champion: Black Friday – America’s traditional (and slightly obscene) shopping orgy following its Thanksgiving feast.
In the other corner, the Challenger: Green Wednesday. This is the cannabis industry’s new pre-Thanksgiving shopping promotion.
Cannabis companies were offering reasonable discounts on their cannabis products, an average of 12.8%, according to Headset Inc.
U.S. mainstream retailers discounted heavily. Black Friday sales featured an average discounting of products by 19.1%.
When the dust settled, it wasn't even close. Green Wednesday was a promotional success. Black Friday was another U.S. retail massacre.
Green Wednesday registered a 40% increase in sales, versus an average from the previous four Wednesdays. Black Friday sales fell 6% versus an average of the previous four Fridays, according to Headset.
There are actually two messages here. Despite endless happy-talk from the mainstream media, overall U.S. retail sales remain extremely anemic. Brick-and-mortar retail sales continues to wither and die.
Some of this retail bleeding is being made up in online sales. But it doesn’t make up for the drop off in retail store traffic and sales. This is illustrated from an article from the U.S.’s disappointing 2018 holiday shopping season.
Brick-and-mortar’s traffic is still in the negative column. As Amazon and other retailers drive increased online sales and traffic, visits to physical stores, where the bulk of the industry’s sales is made, continued to slow. RetailNext, which measures store traffic and other data at more than 425 retail brands, said brick-and-mortar sales on Thanksgiving and Black Friday had dropped by as much as 7% while traffic was down 5% to 9%—at least the fourth straight year when both of those measures declined.
In this anemic retail environment, this makes the surge in Green Wednesday cannabis sales all the more significant. Cannabis is a high-growth retail sector within a stagnant consumer economy.
In turn, this makes the drop-off in cannabis stocks all the more irrational – if not completely perverse. For investors putting dollars into any retail stocks, where do you want your money to go?
Invest in mainstream U.S. retailers? Black Friday sales down 6% (from average sales levels) and down for at least the fifth straight year.
Or, do you want to put your U.S. retail sector investment dollars into the high-growth, emerging cannabis sector?
It’s a no-brainer.
Obviously, lingering anti-cannabis biases and negatively slanted reporting from the mainstream media are contributing to this valuation disconnect. Extremely aggressive short-selling has also contributed to this slide.
However, the calendar is about to tick over to a New Year. Tax-loss selling of cannabis stocks is about to come to an end.
Presumably, we are all one year older-and-wiser.
Is 2020 the year that investors bail out of the stagnant companies (and stocks) of mainstream U.S. retail and embrace the high-growth cannabis sector?
If so, fasten your seatbelts and prepare for take-off.