The retail sector is not exactly in recovery mode, however, there are strategies that smart retailers are using to goad shoppers into, well, shopping. Related exchange traded funds (ETFs) may benefit if these tactics help bring back consumers.

One thing consumers don’t believe they need is more financial or professional stress. Advertisers and retailers know this, so they are catering to the fact that the new American consumer is much more cautious and much more in control of impulsive spending. [One Retail Sub-sector Lags.]

Adweek explains that the two routes retailers are approaching consumers are:

  • Assume that all the anxiety and uncertainty is there, build off of it, but don’t waste time actually stating this known fact in advertising. Reminding consumers of the economic climate is viewed as a downer and a waste of words.
  • Tap into the positive feelings consumers are having about their newfound mindfulness and smart shopping habits — they are in control, are seeing things clearly, and are feeling pretty good about themselves.

Retailers have their work cut out for them. Eighty-four percent of Americans believe that they have “over-consumed” and are repenting. Only 21% believe they will return to their spend-crazy ways, although they have a less optimistic view of their fellow Americans: 62% believe that the country will return to heavy consumption. [5 ETFs for the New Retail Climate.]

For more stories about retail, visit our retail category.

  • SPDR S&P Retail (NYSEArca: XRT)

  • Vanguard Consumer Discretionary ETF (NYSEArca: VCR)

  • Consumer Staples Select Sector SPDR (NYSEArca: XLP)

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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