Shopping and consumer trends are changing as more buyers rely on the convenience of online retailers to quickly and easily meet their discretionary needs. As the retail landscape changes, investors can also capitalize on the trend through exchange traded funds that target the e-commerce segment.
About 51% of Americans prefer to do their shopping online, with Millennials and Gen Xers spending an average of 50% more time than Baby Boomers, reports Lauren Fam for G2Crowd.
According to G2Crowd, 67% of Millennials prefer online shopping venues and 56% of Generation Xers buy online, whereas 41% of Baby Boomers prefer to shop online and 28% of seniors rely on only shopping.
“We predict that over the next two years, the margin between e-commerce sales and in-store sales will increase by at least 5%,” according to G2Crowd.
Nevertheless, traditional brick-and-mortar shops are not taking this lying down. Many will have to adapt to the changes in the digital age to keep up with an increasingly competitive retail environment. The “omnichannel” has become a new buzzword within the industry, potentially bridging the gap between traditional and new age. For example, a consumer could buy online and then pick up their order in store or purchase in-store to have the item shipped to one’s home.
“Given that fact and the recent rise in store closings, we predict that in the next year, 20% of brick-and-mortar retailers will begin implementing omnichannel strategies,” according to G2Crowd.
As the market environment shifts and changes, investors may also have the opportunity to capitalize on the growth potential of the e-commerce segment. For example, the Amplify Online Retail ETF (NasdaqGM: IBUY) is comprised of global companies that generate at least 70% of revenue from online or virtual sales.
With the rise of online retailers or e-commerce, many retail stores are seeing less foot traffic. The ProShares Decline of the Retail Store ETF (NYSEArca: EMTY) and ProShares Long Online/Short Stores ETF (NYSEArca: CLIX) both take a short position in brick-and-mortar retail stores to capitalize on weakness in traditional stores. Meanwhile, the ProShares Online Retail ETF (NYSEArca: ONLN) takes on a long position in online retailers.
As investors look for ways to capture growth in the emerging markets, some may look to a targeted consumer-sector EM play, such as the Emerging Markets Internet & Ecommerce ETF (NYSEArca: EMQQ), which includes access to EM companies related to online retailers or the quickly expanding e-commerce industry. To be included within the ETF’s underlying index, companies must derive the majority of their profits from E-commerce or Internet activities and further includes search engines, online retail, social networking, online video, e-payments, online gaming and online travel.
For more information on the consumer sector, visit our consumer discretionary category.