Online shopping has major appeal. Not only is there no need to find a parking space or fend off pushy salespeople, but often looking around online can help you discover bargains that can’t be found in brick-and-mortar shops. Add in a free shipping deal, and shopping by computer becomes nearly irresistible.
It’s not all doom and gloom for retailers – there have been signs of a turnaround. According to the National Retail Federation, retail industry sales for January (excluding autos, gas stations and restaurants) increased 2% year-over-year and 0.1% seasonally adjusted from December. The U.S. Commerce Department reported that total retail sales in January rose 0.3% seasonally adjusted from December and 4.6% year-over-year. Economists expect to see continued improvements this year. [Consumers, Manufacturing and Incomes.]
ETFs have done a good job of reflecting these climate changes, but be sure to look under the hood. Aside from watching the 200-day moving average for opportunities, check for funds that hold names that could benefit from these trends. [Can Luxury ETFs Withstand Bargain-Hunters?]
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- SPDR S&P Retail (NYSEArca: XRT): Top holdings include CarMax (NYSE: KMX), Dress Barn (NASDAQ: DBRN) and Jo-Ann Fabric Stores (NYSE: JAS)
- PowerShares Dynamic Retail (NYSEArca: PMR): Bargain companies and stores with their own brands like Bed Bath & Beyond (NASDAQ: BBBY), Dollar Thrifty Automotive Group (NYSE: DTG), Hertz (NYSE: HTZ) and Target make up this fund.
- Retail HOLDRs (AMEX: RTH). Companies with a heavy online presence, such as Best Buy (NYSE: BBY), Amazon (NASDAQ: AMZN) and companies with their own store brands like Wal-Mart, Target and CVS (NYSE: CVS) make up this fund.
- Vanguard Consumer Staples ETF (NYSEArca: VDC). Lots of names anyone would know: General Mills (NYSE: GIS), Heinz (NYSE: HNZ), Pepsi (NYSE: PBG) and Yum! Brands (NYSE: YUM). Many people may have gone generic, but there’s still a large population out there that swears by brand names.
- PowerShares Dynamic Leisure & Entertainment (NYSEArca: PEJ). McDonald’s (NYSE: MCD), Yum! Brands (NYSE: YUM), Expedia (NASDAQ: EXPE), Bob Evans Farms (NASDAQ: BOBE). People aren’t eating out as much as they used to, but when they do, they’re usually thinking “cheap,” not “five-star dining.”
Max Chen contributed to this article.