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Consumer Sentiment Indicates Important Trends for Investors

Dan Moskowitz
January 13, 2014

With the conclusion of the holiday sales season, typically the driver of a large percentage of retailer sales volumes, let's take a look to see if Black Friday's popularity is losing market share to Cyber Monday. If that's the case, then it means (NASDAQ: AMZN) will continue to steal share from big-box retailers like Wal-Mart (NYSE: WMT), Target (NYSE: TGT), Best Buy (NYSE: BBY) and other types of retailers.

SAP Retail recently ran a study on social media mentions and sentiment for Black Friday and Cyber Monday. The results might provide important trends for investors.  

Social media mentions
According to SAP Retail, 72% of consumers mentioned Black Friday on social media sites during the holiday shopping season, whereas only 28% of consumers mentioned Cyber Monday. This might come as a surprise to some.

Cyber Monday is growing faster, but Black Friday is still a much bigger shopping holiday. There's also another important difference between these two shopping holidays, and it could indicate growth for Cyber Monday. 

Happier consumers
Three of the most common words used by consumers on social media sites when discussing Black Friday were: happy, great, and excited. Those are positives, but 'frustrated' and 'angry' were also on that list. The word 'bored' was also used, but not as often.

For Cyber Monday, the most commonly used words used when discussing the holiday were: happy and excited. To a lesser extent: frustrated, angry, concerned, and amazing.

While there is certainly more positive sentiment associated with Cyber Monday than Black Friday, positive sentiment for Black Friday improved on a year-over-year basis, and in a big way. 

Sentiment changes
SAP Retail measured year-over-year sentiment changes for Black Friday based on the two weeks surrounding the shopping holiday. The results showed a 72% year-over-year increase in positive sentiment. This likely relates to some retailers opening earlier on Thanksgiving Day, despite many people being opposed to this trend due to family traditions. It appears as though more people accept it because it adds more time to shop.

Positive sentiment also increased for Cyber Monday to the tune of 19%. This might not be as impressive, but positive sentiment was already high for Cyber Monday, so there wasn't as much room for growth. Now let's take a look at the most important numbers from an investing standpoint.

Most mentions
If a certain type of retailer is mentioned more than another, then that type of retailer is likely to experience more volume. Shoppers tend to follow the herd, so if one type of retailer catches momentum on a social media site, it can act as a catalyst for increased sales.

On Black Friday, the most mentions on social media sites belonged to big-box retailers, which were mentioned 36% of the time. This is potentially good news for Wal-Mart and Target. Electronic stores were mentioned second-most at 29% of the time.

What's the first retailer that comes to mind when someone says, "electronic store?" It's likely Best Buy. Therefore, Best Buy might report a solid quarter, at least on the top line.

Online retailers were the third-most type of retailer mentioned on Black Friday at 12% of the time. Department stores were mentioned 11% of the time. Department store mentions have slipped 25% since 2011. Apparel st