This Friday — actually, midnight of Thanksgiving day — the nation’s most ridiculous shopping event begins, something now called Black Friday, something that used to be called “leftover turkey day.”
Analysts desperate to see if Maria Bartiromo is as smart in person as she is on the air — she is smarter, actually — are now popping up on CNBC, making a wide range of predictions about Black Friday 2011. The consensus is it will be a “decent” spending season — the consumer is going to continue to be “tight-fisted,” but things have “loosened up a bit.” I love the precision and science of these kinds of projections, don’t you?
Here is my one man consensus — keep it simple, keep it contrarian and go where Wall Street won’t go.
This leads me to something I call the New Frugal.
This is an investment thesis I proposed right after the crash, as the Great Recession took hold. Although I was mocked then, since I am writing about it today, as it turns out, I was actually right. In tough times, which will last for a few more years minimum, consumers don’t just pull back in their aggregate level of spending — they pull back and re-think how they spend. Especially during the holiday spending season that begins, sort of, on Black Friday.
This translates into not just, “how much will I spend?” but into “I am spending less, and I am going to spend on quality, on brand and on customer service. I want my money’s worth.” Consumers have moved from volume to quality, from 10 presents in shiny paper to one or two presents and maybe a better Christmas dinner or organic Chanukah latkes. This phenomenon has borne itself out the past three spending seasons.
Don’t believe me about the New Frugal? The marketing of diamonds to the masses — “Say it With a Diamond,” and so on began in the middle of the Depression. The very expensive refrigerator replaced the inexpensive ice box during the Depression.
For example, Apple‘s (NASDAQ:AAPL) sales doubled during our very own Great Recession thanks to the iPhone, which essentially was the sale of a $300 phone with a two-year contract — during a time when many competitive phones were free with a two-year contract. This flight to quality is going to accelerate this holiday spending season, beginning with Black Friday.
The following five companies embody this New Frugal. You will notice that they are selling goods that are supposedly too expensive to buy during a Great Recession, yet they have, on average, seen their stock price more than quadruple in the past three years.