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The holiday season saw a robust start, with Americans spending considerably this year over the five-day Thanksgiving weekend. Significant discounts across various categories, including beauty products, toys and electronics, have been attracting Americans to spend more. The trend is likely to continue for the rest of the holiday season.

While several ETFs are poised for solid gains from this trend, SPDR S&P Retail ETF (XRT - Free Report), Amplify Online Retail ETF (IBUY - Free Report), ProShares Online Retail ETF (ONLN - Free Report), ETFMG Prime Mobile Payments ETF (IPAY - Free Report) and Global X FinTech ETF (FINX - Free Report) look to benefit the most from the annual shopping event.

Recap of Thanksgiving Weekend

According to a survey by the National Retail Federation (“NRF”), more than 200 million shoppers engaged in in-store and online purchases over the Thanksgiving weekend (Thanksgiving Day through Cyber Monday). This marks about 2% growth from the previous year and an increase from the NRF's initial estimates of 182 million. About 121.4 million people visited physical retail locations, whereas 134.2 million opted for online shopping. From Nov 1, 2023, to Cyber Monday, consumers spent $109.3 billion online, up 7.3% year over year.

On average, consumers spent $321.41 on holiday-related purchases during the five-day period compared with $325.44 last year. The top destinations for Thanksgiving weekend shoppers were online (44%), grocery stores and supermarkets (42%), department stores (40%), clothing and accessory stores (36%) and electronics stores (29%). The top gifts purchased during the five-day period included clothing and accessories, toys, gift cards, books, video games, and personal care or beauty items.

Black Friday was the most popular day for in-store shopping, with 76.2 million shoppers flocking to brick-and-mortar locations, per NRF. Black Friday also continued its dominance as the most popular day for online shopping, with 90.6 million consumers making online purchases.

Per Adobe Analytics, online sales rose 7.8% to a record high of $38 billion for the Thursday-Monday period, called Cyber Week, indicating a robust start to the holiday shopping season. Cyber Monday was the biggest spending day, with sales climbing 9.6% to a record $12.4 billion as shoppers clicked “buy” on Hot Wheels toys, PlayStation 5, smartwatches and kitchen appliances. Adobe said that discounts peaked at 31% for electronics and at 27% for toys on Cyber Monday.

From Nov 1 to Nov 27, consumers have spent $109.3 billion online, up 7.3% year over year. Over half (60%) of this spending was driven by five categories, including electronics ($21.7 billion), apparel ($19.2 billion), furniture ($14.7 billion), grocery ($6.8 billion) and toys ($3.1 billion) — key growth drivers now in the digital economy.

Solid Holiday Trends

With about half of Americans' holiday shopping left untapped, the NRF expects retail sales to rise 3-4% year over year to $957.3-$966.6 billion during the full November-December holiday season, saying that consumers will continue to look for big promotions and bargains. This marks a return to pre-pandemic growth levels. Online and other non-store sales are likely to increase 7-9% to $273.7-$278.8 billion. This indicates a rise from the $255.8 billion reported last year.

Adobe expects online holiday sales to increase 4.8% year over year to reach $221.8 billion this holiday shopping season (from Nov 1 to Dec 31). This growth is likely to have been driven by record discounts and the popularity of Buy Now, Pay Later (“BNPL”) methods. As e-commerce growth continues to outpace in-store shopping, Adobe expects $1 in every $5 to be spent online this holiday season.

ETFs to Buy

SPDR S&P Retail ETF (XRT)

SPDR S&P Retail ETF tracks the S&P Retail Select Industry Index, which provides exposure across large, mid and small-cap stocks. It holds well-diversified 78 stocks in its basket, with none making up for more than 2.4% share. SPDR S&P Retail ETF is well spread across various industries with a double-digit allocation each in apparel retail, specialty retail, automotive retail, and broadline retail.

SPDR S&P Retail ETF is the largest and most popular in the retail space, with an AUM of $423.1 million and an average trading volume of 7.8 million shares. It charges 35 bps in annual fees and has a Zacks ETF Rank #2 (Buy), with a Medium risk outlook.

Amplify Online Retail ETF (IBUY)

Amplify Online Retail ETF offers global exposure to companies with significant revenues from the online retail business, traditional online retail, online travel, online marketplace and omni-channel retail by tracking the EQM Online Retail Index. IBUY holds 72 stocks in its basket, with none accounting for more than 4.1% of assets. Amplify Online Retail ETF has the largest allocation in online retail at 39% and online marketplace at 38%.

Amplify Online Retail ETF has attracted $189.3 million in its asset base and charges 65 bps in annual fees. IBUY trades in an average daily volume of 18,000 shares.

ProShares Online Retail ETF (ONLN)

ProShares Online Retail ETF offers exposure to the companies that principally sell online or through other non-store channels and then zeros in on the companies reshaping the retail space. It tracks the ProShares Online Retail Index, holding 19 stocks in its basket. ONLN is highly concentrated on the top firm, while the other firms hold no more than 8.3% of the assets.

ProShares Online Retail ETF has accumulated $99 million in its asset base and charges 58 bps in annual fees. ONLN trades in an average daily volume of 18,000 shares.

ETFMG Prime Mobile Payments ETF (IPAY)

ETFMG Prime Mobile Payments ETF is the first ETF to target the mobile payments industry. It follows the Prime Mobile Payments Index and capitalizes on the shift from credit card and cash transactions to digital and electronic systems. ETFMG Prime Mobile Payments ETF holds 53 stocks in its basket, with each making up 6.3% of assets.

ETFMG Prime Mobile Payments ETF has an AUM of $346.4 million and charges 75 bps in annual fees. It trades in an average daily volume of 45,000 shares.

Global X FinTech ETF (FINX)

Global X FinTech ETF invests in companies on the leading edge of the emerging financial technology sector, which encompasses a range of innovations helping to transform established industries like insurance, investing, fundraising and third-party lending through unique mobile and digital solutions. It follows the Indxx Global FinTech Thematic Index, holding 60 stocks.

Global X FinTech ETF has an AUM of $351.5 million and trades in a volume of 53,000 shares a day on average. It charges 68 bps in annual fees.

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