Retail ETFs May Benefit From Smarter Retailers

January 14th at 11:00am by Tom Lydon

ETF retail

Last year wasn’t a good year for the retail sector and related exchange traded funds (ETFs), with companies holding high inventories and consumers not biting. Retailers have learned a harsh lesson and they are now adapting to make themselves more efficient.

At the 99th annual Conference and Exposition for the National Retail Federation, Mark Zandi, chief economist and co-founder of Moody’s Economy.com, says “the economy today is measurably better than a year ago” and he also pointed to the gradual improvement of the job market as the best gauge of the recovery, writes Jessica Tsai for destinationCRM. [Same-store retail sales.]

The United States Department of Labor’s most recent unemployment numbers for December show that the rate remains unchanged from the month before at 10%. United States Secretary of Labor Hilda L. Solis remains optimistic about the future outlook as long as job growth in retail grows.

Allen Questrom, former chairman and chief executive officer of J.C. Penney (NYSE: JCP), sees that the retail sector took the financial hit and came out wiser and more efficient. Expect that fewer companies will engage in dramatic mark downs while companies will begin to hold less inventories.

Howard Levine, chairman and chief executive officer at Family Dollar (NYSE: FDO), says that customers want value. Family Dollar has begun to reducing inventories of more frivolous items and adding more discretionary goods. [Service sector numbers.]

Panelist at the NRF agree that the only way to achieve growth is by expanding into international markets. They all see the fast growth potential of foreign markets, especially in emerging markets, but for now, retailers are limited to the “growth of America.”

For more information on retailers, visit our retail category.