The holiday season is approaching but retailers continue to fret as there are no signs of the coronavirus subsiding. Retail sales have been increasing over the past few months but are still way behind the year-ago levels. However, the pandemic has seen an increasing number of people relying on online shopping, which has been a savior for the retail sector.
Since the present situation is likely to continue, people will resort to buying online through the holiday season. According to a new report from eMarketer, holiday sales are projected to grow marginally, with e-commerce expected to put up a great show. Also, despite low morale and millions of job losses, the retail sector has somewhat bounced back, thanks to e-commerce sales, and consumer spending too is on the rise.
E-commerce to Boost Holiday Sales
According to eMarketer, holiday sales are going to witness a meager jump this time. The firm predicts retail sales for the November-December holiday period to touch $1.013 trillion, increasing a nominal 0.9% from last time. However, this is also expected to be the second-ever season to cross the $1 trillion mark in sales.
The majority of this year’s sales should get a boost from online shopping. Per the film, sales at brick-and-mortar stores are expected to account for 81.2% of the total retail sales, declining 4.7% this holiday season. However, online sales are projected to surge 35.8% this time.
The unexpected growth in online orders during COVID-19 has already put immense pressure on shipping carriers. Although retailers already reported Black Friday-level order volume in the second and third quarters, they’re expecting an even bigger jump in Q4. A separate Salesforce.com, Inc. CRM report predicts that the overall number of holiday packages that will be sent out globally this season will surpass the shipping capacity for traditional carriers by at least 5%. This may further hamper on-time delivery and delay around 700 million orders worldwide.
E-Commerce Saving Retail Sector
Per a separate eMarketer survey, U.S. online sales will likely reach $794.50 billion this year, up 32.4% year over year and accounting for 14.4% of all retail spending. It also expects e-commerce sales to reach 19.2% of all U.S. retail spending by 2024. The increase for 2020 is much higher than the 18% gain predicted by the company in the second quarter.
Also, retailers with a strong online arm have been hiring aggressively ahead of the holiday season to manage the rush and ensure on-time delivery. Moreover, consumer confidence hit a six-month high in September, reflecting greater confidence in the U.S. economy after a summer lull. These are indications that online shopping, which was so long a laggard, is finally finding a strong foothold now.
Much of this year’s holiday shopping will be done online as a definite treatment or vaccine for coronavirus looks unlikely. Given this scenario, it will be wise to invest in retail stocks with a strong online presence.
JD.com, Inc. JD through its website www.jd.com and mobile applications offers a selection of authentic products. It has a wide array of products starting from computers, mobile handsets and other digital products, to home appliances, automobile accessories, clothing and shoes, luxury goods, personal care and other items.
The company’s expected earnings growth rate for the current year is 48.1%. Its shares have advanced 33.7% in the past three months. JD.com carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Target Corporation TGT has evolved from just being a pure brick & mortar retailer to an omni-channel entity. The company has been investing in technologies, improving websites and mobile apps, and modernizing the supply chain to keep pace with the changing retail landscape and better compete with pure e-commerce players.
The company’s expected earnings growth rate for the current year is 12.4%. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the past 60 days. Target has a Zacks Rank #2.
Carvana Co. CVNA is a leading e-commerce platform for buying and selling used cars.The company’s end-to-end business model covers every aspect of used-car retailing.
Carvana’s expected earnings growth rate for the current year is 10%. The company’s shares have advanced 35.7% in the past three months. Carvana has a Zacks Rank #2.
Revolve Group, Inc. RVLV is an e-commerce fashion company. It markets and sells men's and women's designer apparels, shoes and accessories. The company offers jackets, pants, shorts, skirts, sweaters, tops, shoes and jewelry products.
The company’s expected earnings growth rate for next year is 32.1%. The Zacks Consensus Estimate for current-year earnings has improved 3.9% over the past 60 days. Revolve Group has a Zacks Rank #1.
The Kroger Co. KR operates supermarkets, multi-department stores, marketplace stores and price impact warehouse stores. Its combination food and drug stores offer natural food and organic sections, pharmacies, general merchandise, pet centers, fresh seafood, and organic produce; and multi-department stores provide apparel, home fashion and furnishing, outdoor living, electronics, automotive products and toys.
The company’s expected earnings growth rate for the current year is 49.1%. The Zacks Consensus Estimate for current-year earnings has improved 15.5% over the past 60 days. Kroger has a Zacks Rank #2.
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