With Q3 earnings season nearly over, the focus is likely to shift to the retail sector, which hogs all attention with the advent of the holiday season. Retail stocks get a thrust during this busiest part of the year, which is often a make-or-break time for retailers. As the countdown to Black Friday begins, investors also scurry for bright spots in the space.
Eye-popping Black Friday deals usher in the Christmas shopping bonanza. Apart from price-matching policies, retailers try to sweep buyers off their feet with early-hour store openings, huge discounts, promotional strategies and free shipping on online purchases. Competition will certainly be tough, be it at the brick-and-mortar stores or online portals.
Per the survey conducted by RetailMeNot, consumers are likely to spend an average of $743 this year during the Black Friday weekend through Cyber Monday up from the prior-year figure of $505.
Retailers such as Amazon (AMZN – Free Report) , Best Buy (BBY – Free Report) , Target (TGT – Free Report) and others are efficiently allocating a large chunk of their capital toward a multi-channel growth strategy focused on improving merchandise offerings, developing IT infrastructure to enhance the web and mobile experience of customers, renovating stores with a modern look, and developing fulfillment centers to enable speedy delivery.
Retail Space Rides on Favorable Indicators
The rebound in oil prices from all-time lows, an improving labor market, along with a rising housing market and manufacturing sector signal that the economy is in recovery mode that rose 3% in the third quarter of 2017. Further, the Fed’s indication of a likely rate hike in December reflects the underlying fundamental strength of the economy.
Analysts believe that buoyant stock market, gradual wage acceleration, fall in the unemployment rate to 17-year low, and a lift in the economic activity post hurricanes were enough to boost consumer confidence. We anticipate this positive sentiment to translate into higher consumer spending that may help increase sales in the current retail landscape, which is witnessing a sea change with the focus gradually shifting to online shopping.
