Black Friday: How the pandemic changed consumer shopping habits is becoming clearer

Yahoo Finance's Brian Sozzi gives a live report on the streets of Herald Square on Black Friday shopping as the market is overshadowed with low earnings today.

Video Transcript

- Welcome back to Yahoo Finance Live. We are continuing to track the market sell-off on this Black Friday, the Dow sinking more than 1,000 points, off nearly 3% now. The NASDAQ down about 2% and the S&P 500 also-- also off more than 2%. All of this, of course, triggered by the discovery of this new variant in Southern Africa. It was first discovered over in Botswana, but there's a lot of concerns about whether, in fact, the current vaccines on the market offer protection from this new variant.

Take a look at some of the vaccine stocks. We have seen those moving higher in this session, Pfizer up more than 5%, Moderna up nearly 30%. So significant upside there. Travel stocks, though, certainly going in the opposite direction, we should mention on a weekend where we're seeing a lot of the travel pick up to 2019 levels, pre-pandemic levels. Still fears of potential-- this new variant spreading has raised a lot of concerns within that space. You see Delta, American, Southwest all down on the news.

Want to do a quick check of Treasury yields. We have seen the usual safe havens moving in the Treasury, the bond markets certainly no exception. The 10-year yield right now at 1.49%, we have seen it move about more than 10 basis points. We're watching gold as well pushing higher on the back of these safe haven plays, and then the dollar moving in the opposite direction.

Also, oil seeing-- seeing the biggest declines. This year, the WTI seeing the worst drop since April of last year, right now trading at $69 a barrel, Brent crude at $73. All of the moves that we're seeing in the markets today overshadowing what is traditionally the biggest shopping day of the year and the start of the holiday season, although you could argue a lot of people started much earlier this year. The National Retail Federation is looking at an increase of 8.5% to 10.5% this holiday season.

As always, we've got our very own Brian Sozzi standing by in New York's Herald Square with a live report. What have you seen so far, Brian? It feels like the crowds have returned, but certainly, the news today raising concerns about whether there could be a bit of a pullback.

BRIAN SOZZI: Well, hey, Akiko, I can't confirm there are humans here. A lot different scene out here by Macy's Herald Square in New York City. Really, one of the-- just the largest department store in the country here. The crowds have been slowly building all morning long. And I heard you talking about-- I've been watching, listening to the program all morning long-- I would say 95% of the people that I've been seeing in the stores and outside along these streets over here, they all continue to wear their masks, which is certainly a good thing, whether you're vaccinated or not. So masks are definitely top of mind with people right now.

By and large, I would say the crowds, again, have been building all morning long. Still, this is not a typical Black Friday. And when I say typical, this is not 2010, 2011, where you saw lines of people really hugging the stores, hugging the doors when they opened here. It just goes to show, I think, how the pandemic, when it started last year, really hit the reset button on the retail sector-- how people shop, when they shop, why they shop.

And to that point, we have some-- some of the latest Adobe sales data. US online sales only up 1% year over year. And I know you saw those strong results last year, but still, a 1% increase when the stores were closed on a Thursday, on a Black Friday. Again, I would say it's somewhat disappointing start to the holiday shopping season, but there are many weeks that remain here.

Well, look, I've been traveling all morning long. You could see the crowds down here, they are coming back. I can assure you this was not the scene last year. Last year, I was actually masked up, really petrified of the pandemic. Not that I'm not scared now, it's just a little bit of different scene. I am vaccinated, I did not have that last year. But the crowds are back, you could see people wearing the masks.

And really, you know, I walk down the street over there, and you can see there's a Target-- Target store is pretty packed, pretty crowded. And it's interesting what you're seeing in the market here today, Akiko. You're seeing Target shares, at one point, they were in the green. Costco shares at one point were in the green. Walmart is changing between positive and losses on the session.

You're starting to see those investors go back to those big-box stores. By the same token, seeing Gap shares absolutely slammed, Nordstrom shares slammed. Both those companies really had ugly earnings reports this week here. So there's lots of concerns, I think, on how the apparel makers will do this holiday season.

But just another reminder here before I let you go, look, this is not a normal holiday season. A mobile-- a mobile COVID-19 testing station, there's one there. I walked down to the other end of the block, there's another mobile-- mobile testing station out in front of the Target here. So not a normal holiday shopping season. The pandemic remains, really, I think top of mind with people. It's out in front, especially when you see the markets really get obliterated today.

- Hey, Sozzi, want to ask you a quick question just anecdotally while you've been out there. Are there a lot of tourists that are in the area or are you seeing mostly people from out of state or just local people? And then what are they saying that they're interested in buying?

BRIAN SOZZI: The tourists are back. Last year, of course, we had that national Lockdown, So there really was-- there was nobody here. But just walking these Macy's stores, walking the Target store, popping into the Hollister, which is owned by Abercrombie and Fitch, that international tourist customer is back. Now is it back like it was 2011, 2012 or normal times? No, not at all, but that international component has come back as those travel-- as those travel restrictions were eased earlier this month.

And that is very important to a store like Macy's in Herald Square, a lot of these flagship locations in these urban markets. They need that international tourists to come here and spend, spend, spend, and then go ahead and spend even more. But by and large, I would say people are-- I would call this surgical shopping, Karina. You're not seeing-- I haven't seen consumers come out here with bags carrying around their neck-- you know, 20 bags in their hands. That's not the scene.

I think people remain looking for the big deals, and honestly, they're not finding them. I'm not seeing the typical, very aggressive Black Friday deals, which goes to show that retailers continue to battle high levels of inflation, transportation, labor, logistics, you name it. And they're going to be a little hesitant to push through aggressive discounts if they want to protect their profit margins.

- Well, of course, Brian, there's a lot of shopping happening online as well, some steep discounts there. You know, we've talked so much about the resilience of the consumer, especially in the face of these rising cost pressures. What are you hearing from those you've spoken to out there about how much they're willing to spend this holiday season, how that compares to what they maybe spent last year or the year before?

BRIAN SOZZI: I would say the consumer is-- the couple of folks that I have been able to talk to here, they are spending more year over year. Is it a lot more in some cases? No. But it is a different holiday shopping season. Keep in mind, Akiko, this year, you have folks, likely, their wages are higher year over year. You have a US savings rate close to double digits. And you have a stock market, at least before today's route, earlier this month was touching record highs.

So there are lots of catalysts, I think, for the US to consumer to come out. It's just a matter of how do they take these inflationary prices they're seeing in the stores. But again, at least today, you're seeing the folks come out here to some degree. Whether those-- whether this traffic continues into the weekend, unclear, but make no mistake, I mean, the pandemic has changed how people shop probably forever. I think those days where you saw folks getting run over on Black Friday morning, they're just over. They're just over, and they probably should be. How ridiculous does that look now, you're going to knock somebody over to get inside of a Walmart store to get 20% off a turkey. That's absurd.

- Yeah, you know, Brian, I was going to say, that's a good thing. It's a good thing that we're not seeing people--

BRIAN SOZZI: That is a good thing.

--getting run over in stores. Although sometimes, the video is good. Are we allowed to say that?

BRIAN SOZZI: I'm getting run over right now, Akiko. There's a lot of people here. So it's good to see it. I need to go put my mask on.

- Stay safe out there Brian. Brian Sozzi in his element right out there on Black Friday in Herald Square. Appreciate the reporting. Of course, we're going to check in with you a little later in the show.

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