The SPDR S&P Retail ETF (NYSEArca: XRT) and other retail exchange traded funds have been solid performers to this point in 2018. Some fresh data points suggest that trend could continue as the back-to-school shopping season kicks into high gear.
XRT features exposure to the following corners of the retail industry: Apparel Retail, Automotive Retail, Computer & Electronic Retail, Department Stores, Drug Retail, Food Retailers, General Merchandise Stores, Hypermarkets & Super Centers, Internet & Direct Marketing Retail, and Specialty Stores, according to State Street.
“Spending at retailers — excluding automobiles, gasoline stations and restaurants — is predicted to climb at least 4.5 percent, the National Retail Federation said Monday, giving an updated outlook for the remainder of the year. That’s compared with a prior forecast range of 3.8 to 4.4 percent,” reports CNBC.
During the month of June, retails sales grew 0.5%, which, when paired with the 1.3% growth during the month of May, supports the continued boost in spending. In the past 12 months, retails sales have increased by 6.6%, touching slightly above the long-run average since 1980.
Other Retail Ideas
Alternatives to the brick-and-mortar heavy XRT include the ProShares Long Online/Short Stores ETF (NYSE Arca: CLIX).
CLIX has capitalized on the ongoing disruption in the retail space. Shifting consumer habits and the rapid rise of e-commerce have triggered a disruptive and accelerating change in the retail space. While online purchases have increased in response to the global consumers’ increasing reliance on the internet and digital devices, traditional “bricks-and-mortar” retailers, or those that rely primarily on in-store sales to drive revenue, are facing significant challenges.
“Retail sales for the first half of 2018 were up 4.8 percent from a year earlier, NRF said. In the most recent three-months moving average, they have climbed 4.4 percent year over year,” according to CNBC.
Last month, ProShares introduced the ProShares Online Retail ETF (NYSEArca: ONLN). Looking ahead, analysts expect the growth of online retail to continue. About 10% of global retail sales are currently conducted online, which leaves an e-commerce-centric strategy further room for growth. Recent data also indicated that online sales growth could double by 2030.
“Amazon’s annual Prime Day in July is believed to have pulled the back-to-school shopping season even earlier, prompting retailers like Target, J.C. Penney and Kohl’s to roll out deals sooner in the summer. The e-commerce giant said this year’s Prime Day was its largest yet,” according to CNBC.
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