There seems to be a lot of cheer in the Retail – Discount Stores industry that has surged close to 46% in a year’s time, with quite a few companies cutting a promising figure. The industry, which comfortably crushed the S&P 500’s rise of almost 19%, is riding on strategic endeavors by companies and a flattering economic scenario.

The economic landscape is being shaped by a strong labor market, improving consumer sentiment and benefits from tax reforms. It also goes without saying that consumer spending — which accounts for more than two-third of the economic activity — is likely to remain strong. For obvious reasons, retailers are the direct beneficiaries. In fact, the National Retail Federation’s projection of a tick-up in U.S. retail sales of at least 4.5% this year is quite reassuring for retailers.

Such trends along with companies’ efforts to keep pace with evolving shopping patterns are likely to keep players in the Retail – Discount Stores industry (ranked among the top 22% out all Zacks industries) in the win-win zone.

Arrows in Discount Retailers’ Quiver

Markedly, discount retailers are trying all means to retain and strengthen customer base in the face of mounting competition, through effective pricing, brand enhancements, store expansion and remodeling, and efforts to bolster online sales. Significant among the omnichannel efforts is the companies’ focus on expanding in the online grocery space through same-day deliveries and upgraded payment systems. However, efforts to combat competition entails high promotional costs, which along with an aggressive pricing strategy, escalated wage expenses and increased merchandise costs have been eating into margins.

Nonetheless, there are some renowned industry players which have countered these hurdles and performed even better than the industry, courtesy of the aforementioned positives. To top it, these firms have raised their views for the current fiscal, which instills hope on the companies’ prospects.