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How Mind Games Could Boost Retail ETFs

Holiday shopping and sales account for about 40-50% of revenue profit for retailers. Strategies are complicated this season, as retailers look for ways to lure consumers and move retail exchange traded funds (ETFs).

Retailers want your cash now more than ever, and they've got a big bag of tricks they're pulling from, reports Carl Bialik, ELizabeth Holmes and Ray Smith for The Wall Street Journal . And guess what? You often fall for them. [ 5 ETFs to Watch This Holiday Season. ]

A few of the more popular tactics include:

  • Offers that encourage volume purchasing-whether it's two-for-the-price-of-one or discounts that escalate with money spent-play into consumers' determination to get the best bargain possible. [ Retail ETFs Flat Though Consumers Are Fine .]
  • One study showed that while shopping, people are likely to spend more when they see high prices around them on items completely unrelated to what they want to buy.
  • The magic of the number 9 still applies, too. Merely setting prices with the number nine at the end, whether it's $1.99 or $99.99, can make consumers feel they got a deal.
  • Offering dollars-off instead of a percentage off encourages shoppers to buy a little more. [ Shopping the Retail ETFs. ]

These mind games often work. But will they be enough to drive better performance in retail ETFs this holiday season? So far, it seems to: most retail ETFs are up around 7% or more in the last month.

  • SPDR S&P Retail (NYSEArca: XRT)
  • Consumer Staples Select Sector SPDR (NYSEArca: XLP)
  • First Trust Consumer Discretionary AlphaDEX (NYSEArca: FXD)

Tisha Guerrero contributed to this article.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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