Some of the biggest names in retail are also the biggest names in online retail, a theme that’s propelling the VanEck Vectors Retail (RTH) to new highs.

RTH follows the MVIS US Listed Retail 25 Index, “which is intended to track the overall performance of companies involved in retail distribution, wholesalers, on-line, direct mail and TV retailers, multi-line retailers, specialty retailers, and food and other staples retailers,” according to VanEck.

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 ETFs that target the e-commerce segment. Demographic trends are driving those shifts.

“The coronavirus pandemic forced a huge amount of retail purchases to move online, and that has been depicted as a battle between Walmart and But in fact, they might both be winning,” reports Teresa Rivas for Barron’s.

Why It’s Important

Amazon is the undisputed king of online retail, but Walmart and Target are making inroads, too. That’s important to the RTH thesis because those three stocks combine for roughly 37% of the fund’s roster.

“ Inc. and other companies large e-commerce businesses, including Walmart Inc. and Target Corp., will likely ride an uptick in online shopping during the coronavirus pandemic to gain market share from brick-and-mortar retail in the coming years, experts say,” reports S&P Global Market Intelligence.

Some market observers believe changes in consumers’ behavior, which were apparent before the virus, are merely being hastened by the COVID-19 pandemic and that online is where it’s at for retailers – a theme that’s expected to be sticky for years to come. However, integral to boosting the e-commerce thesis over the long haul are reducing challenges in the industry’s economics and scalability.

Jefferies’ Brent Thill sees e-commerce commanding 14.5% of all retail sales this year, up from 11% in 2019.

“Much of that is related to lockdowns that closed stores, and the experts think e-commerce growth will decelerate to 7.8% next year (presumably when a vaccine or effective treatments help to mitigate the risk) before returning to midteens growth in 2022,” according to Barron’s.

Perhaps bolstering the case for these retail giants is the fact there’s still some ground to be made up when it comes to broader retail sales.

However, retail spending remained below pre-pandemic levels in May, totaling $485.5 billion compared to $527.3 billion in February. The increase in retail sales last month helped recover 63% of the sharp drop over March and April, Reuters reports.

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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.