Spotlight on Retail - Fantastic Female Fridays

During this episode of Fantastic Female Fridays, we focused on the retail sector as it has gone through some metamorphic changes this year.

VV FFF Spotlight on Retail

Spotlight on Retail - Fantastic Female Fridays

During this episode of Fantastic Female Fridays, we focused on the retail sector as it has gone through some metamorphic changes this year. We took a look at some trends that could shape the entire sector for years ahead, analysed some stocks across a range of technical and fundamental indicators as well as answered lots and lots of questions.

To watch the full episode, pop across to:

Here are five statistics for you:

  1. In April, the demand for online groceries more than doubled in Italy.
  2. In the UK, Tesco's online grocery business increased to 16% of total country sales in the first quarter of 2020, from about 9%.
  3. Ocado Retail web traffic rose up to 100 times higher than pre-Covid levels
  4. For every hundred dollars that consumers spent on the web on Black Friday in 2019, they spent $121.60 this year.
  5. Cyber Monday 2020 is expected to become the biggest daily sales day in US history!

However, what lies ahead for the retail sector and specifically from an investors point of view?

(The e-mail stops up there and the blog post continues here)

Arising from a recent in-depth McKinsey report and an interesting CNBC article, we deduced that there are four key trends to look out for in the coming weeks and months.

Spotlight on Retail image

 

  1. Increased online shopping

In the aforementioned McKinsey report, about 15 per cent of surveyed consumers have shopped for groceries on a website that they had never used before and among them, more than 50 per cent say they intend to continue shopping at their newfound site for at least some part of their grocery needs.

People have become accustomed to the convenience of buying what they want and when they want it. While we may certainly move back to what we used to do as people naturally enjoy the in-store experience, the direction of eCommerce look set to grow and grow.

  1. A focus on healthy eating and sustainable shopping

The McKinsey report says "Among both Generation Z and millennial consumers, approximately 35 per cent cook meals from scratch more often than they did prior to the COVID-19 crisis, as do 23 per cent of Gen Xers and 17 per cent of baby boomers. While we all know that homecooked and provenance is good for us, the pandemic has given us a big extra push towards this idea in recent months. Many are enjoying the sights and smells in their own kitchen rather than going elsewhere for it too.

  1. Price Sensitivity

The stock market may be very future-focused, but the economy has to deal with the legacy of the past and the realities of the present. People are naturally concerned about the economic impact of government deficits and unprofitable businesses reducing employment in the future. Interestingly, that McKinsey report noted, "In June 2020, 29 per cent of UK respondents were shopping based on a list versus 21 per cent in April; in Germany, the shares were 16 per cent in June versus 6 per cent in April". The retail sector needs to demonstrate value to savvy shoppers.

  1. Increased importance of purpose

In an era where companies talk about their contribution towards the Sustainable Development Goals, investors seek ESG investments and teenagers are conscious consumers, it's important for the retail sector to demonstrate their purpose. Are they focused on developing artisan goods and services? How do they, in turn, participate in shopping local through their supply chains? How does their passion shine through to their customer experience? These ideas before might have been the preserve of Mom and Pop stores, but now big brands need to share their story.

Throughout this highly interactive episode, we discussed and analysed a range of interesting stocks in the sector including

  • Etsy
  • Dollar General
  • Tupperware
  • Amazon
  • Shopify

For a start, we examined their Value, Safety and Timing. Next, we moved on to their Dividend Yields, Earnings per Share and Growth Rate. We examine their Comfort Index ratings, their PE ratios in comparison to their own respective histories and how RT has enabled me to make a decision on not selling a covered call.

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