Retail Sales Soar As Consumers Continue To Swipe-In The Holiday Season

It appears physical stores are doing little to entice consumers through their gates, as shoppers increasingly take advantage of the online landscape.

To date, a strong U.S. labor market and rising levels of personal income have helped fuel healthy spending habits, which in turn has contributed to steady economic growth.

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Against this landscape, consumers have turned to their digital wallets to add more goods to their computerized carts.

According to Adobe Analytics, online holiday spending in 2019 is set to grow more than 14% year-on-year, surpassing US$140bn, with Cyber Monday on track to chart a new record of nearly US$9.5bn, while Cyber Week could account for 20% of the total holiday season revenue.

Adobe Analytics highlighted that over 75% of U.S. e-commerce spend during the holidays is on personal items as opposed to more generic household items – smartphone shopping, for example, was touted as responsible for almost 50% of retail holiday growth.

In low-income markets, spending has mainly shifted toward “something to do,” with the media and entertainment category capturing more market share than in high-income markets. Meanwhile, high-income cities, such as Palm Beach, Florida, and Bronxville, New York, appear to be gravitating toward other types of discretionary items, including large apparel and accessories.

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The activity certainly seems to have boded well for certain exchange-traded funds such as the Amplify Online Retail ETF (Nasdaq: IBUY), which offers equity exposure to global online retailers with at least 70% of their revenues from on-line sales.

The ETF has outperformed the SPDR S&P Retail ETF (NYSEARCA: XRT), with three-year returns of 21.45% compared to a paltry 0.75%, respectively.

IBUY includes among its top holdings exercise equipment company Peleton (Nasdaq: PTON), streaming media giant Netflix (Nasdaq: NFLX) and fintech icon Paypal (Nasdaq: PYPL), while XRT holds firms such as Game Stop (NYSE: GME), Tiffany & Co (NYSE: TIF) and Best Buy (NYSE: BBY).

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The author does not hold any positions in the financial instruments referenced in the materials provided.

The analysis in this material is ...

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