Companies gear up for Black Friday online shopping surge

We outline the firms that could potentially benefit from a surge in online shopping this Black Friday.

Article updated: 26 November 2020 3:00pm Author: Ian Forrest

The latest retail sales figures for October from the ONS were better than expected and indicated that online shopping remains very popular, up 53% compared to pre-pandemic levels. Some consumers have made an early start to Christmas shopping and others find they have more spare cash available thanks to fewer opportunities for spending on things such as nights out and holidays.

All of that augurs well for retailers looking to make the most of the Black Friday and Cyber Monday sales events this year. They’re going to be very different given that many high street shops are now closed due to Covid-related restrictions which means the usual queues and mad scrambles to get into stores to pick up heavily discounted items will be a less common sight. Many consumers will concentrate on seeking out good online deals instead.

The usual suspects, such as Amazon and Currys PC World, will be taking part again and other retailers are keen to get involved this year given the uncertainty over whether shoppers will return to the high street in significant numbers in the crucial Christmas trading period. Beyond the retail sector investors should be aware that there are a wide range of companies that benefit from the trend towards online deliveries and click and collect services.

Longer term the retail sector in general may be hampered by the poor economic backdrop in 2021 but the move to more online shopping is likely to persist in the years to come, even after vaccines become available and restrictions on physical stores are eased. Many more consumers have now become accustomed to the process and the advantages of online shopping, and many companies have spent considerable sums adapting their businesses to provide that channel.

Companies which could potentially benefit include:

Studio Retail

This small company is best known for selling a wide range of products to consumers through hard copy catalogues, but in recent times it has successfully moved most of its customers to online ordering through websites such as Studio.co.uk. That now accounts for around 90% of sales and in August the company said the first 20 weeks of trading in its new financial year had seen a 42% rise in product sales on the website.

DS Smith

This packaging design group has benefited considerably from the increase in online retailing, both in the UK and overseas. A big part of that is down to many retailers moving away from plastic packaging and preferring the more sustainable and environmentally friendly corrugated cardboard products which DS Smith produces using recycled material. The company has adapted to provide its customers with a growing range of services and grown its scale through overseas acquisitions.

Wincanton

Wincanton is a transport and warehousing company which essentially enables the distribution and delivery of products from companies to customers. It was initially hit by the pandemic earlier in the year but since the summer trading has improved steadily, especially in home deliveries and eFulfilment, thanks to more people shopping online. Several new contracts have been won with retailers, including Waitrose and Morrisons and in early November the company said it expected full-year results to be much better than previous forecasts.

Dixons Carphone

The owner of the Currys PC World and Carphone Warehouse chains has already launched its Black Friday offers and could benefit from the surge in demand for home entertainment as people are spending more time at home. A big increase in online sales during the pandemic has helped Dixons to mitigate the closure of many of its stores and the company is looking to continue that momentum by offering Black Friday deals on a wide range of electrical items from TVs to smartphones and coffee machines.

Boohoo

With many high street clothing stores closed during the lockdown online fashion retailers such as Boohoo could benefit. The company has participated in the event for several years and this time round is offering deals on both Black Friday and cyber Monday. Whilst Boohoo has faced criticism for very serious issues in its UK supply chain amidst modern slavery allegations this year sales have remained very strong through the pandemic. In September the company reported a 45% rise in revenue in the six months to August and said it had made a good start to the second half. It has set out an ‘Agenda for Change’ following this year’s scandal, which will be watched closely.


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Ian Forrest

Investment Research Analyst

Ian’s background in investments, financial journalism and research has seen him advising private investors on equities and helping to manage portfolios. His qualifications include the Certificate in Financial Planning and the Chartered Institute for Securities & Investment’s Investment Advice Diploma.

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