Sector Bird’s Eye View: Retail

by 10 Oct, 2019

What is it?

The retail sector is made up of online and brick and mortar companies that sell retail merchandise to consumers. Retailers target lots of individual end-users with small orders, rather than taking larger orders from a select few wholesale, corporate, or government clients.   

Why is it important?

The retail sector is where many people do a sizable amount of their spending. We have some of our most recognizable brand and company names, like Amazon and Nike. The retail sector (and the data retrieved from it) provides investors with some very useful information about the health of the economy and its consumers. 

Popular Participants

  • Amazon
  • eBay
  • Nike
  • Alibaba
  • Walmart
  • Macys

Popular ETFs

  • SPDR S&P Retail
  • S&P 500 – Retailing
  • Amplify Online Retail
  • iShares Global Consumer Discretionary

When does it do well/badly?

The retail sector thrives in a low interest rate environment, when consumers have more disposable income to spend on new clothes and other retail goods. Retail responds positively when the economy experiences a growth phase, and often aligns closely with the business cycle. 

Why should I invest? 

Retail companies often offer a great starting point for many new investors, as they often have personally interacted with some of the companies and understand them better than other sectors. Investing in retail stocks around holiday periods can also have explosive returns when companies experience bumper sales seasons and outperform their peers. A keen eye for trends in fashion and popularity can also bring above average returns for the astute investor.

 

 

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