Online Game Is Not Over Yet: These Retailers Stand to Gain

E-commerce is hogging limelight now due to the convenience and safety it is offering amid the ongoing pandemic. E-commerce has revolutionized the retail universe in the recent past. From browsing a product to making quick order, delivery, return, personalization and after-sale service, online shopping addresses all. And COVID-19 jitters are most likely to further transform the online world.

Shedding further light on e-commerce, Americans now prefer e-retailing over physical retailing. Per the Digital Commerce 360 data, total U.S. online sales were $73.2 billion in June, up significantly from $41.5 billion in the year-earlier period. According to the eMarketer forecast, U.S. e-commerce sales are expected to increase 18% this year, with spending of nearly $709.8 billion on e-commerce. This is likely to account for 14.5% of the overall U.S. retail sales. The report also predicts U.S. click-and-collect e-commerce sales to reach $58.5 billion, mirroring 60.4% growth from the initial projection.

As COVID-19 stay-at-home orders drastically changed consumers’ shopping paradigm, players started directing their resources more toward digitization with the majority of them adopting a contactless curbside pickup service. Retailers are now boosting their digital capabilities including expediting delivery services. The pandemic has triggered behavioral changes, pushing shoppers online for essential products. Even though stores are reopening on easing of lockdown restrictions, the online trend is here to stay to keep the pandemic at bay with mounting cases. So, here we bring a few retailers banking on e-commerce to sail through these trying times.


Retailers Bracing E-commerce Concepts

Renowned general merchandise retailer, Big Lots, Inc. BIG has been gaining from its e-commerce initiatives. The company is focused on improving performance by enhancing digital capabilities with Buy Online Pick-up In Store, launching the Broyhill brand and expanding high-volume stores. Also, its Lease Online Pickup in Store initiative has been receiving positive customer feedback. Moreover, it has been making significant improvements to its online channel with better search, minimized delivery time and enhanced payment options to boost customer experience. The Columbus, OH-based company’s shares have appreciated 103.2% in a three-month time frame and currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Next we have Sprouts Farmers Market, Inc. SFM, which has been benefiting from coronavirus-led demand. Amid the pandemic, this fresh and organic food products’ company has expanded its grocery pickup service in partnership with Instacart, across all its stores. The service offers more than 12,000 natural and organic products. The company’s focus on product innovation, emphasis on e-commerce, expansion of private-label assortment and enhancement of technology bode well. These initiatives helped the company sustain its positive comparable store sales trend in first-quarter 2020. Sprouts Farmers is focused on lowering operational complexity, optimizing production and improving in-stock position. Encouragingly, the Phoenix, AZ-based company’s stock has returned 26.1% in the past three months and presently sports a Zacks Rank #1.

Consumer electronics retailer, Best Buy Co., Inc.’s BBY digital endeavors bode well. The company’s quick shift to a contactless curbside service-only operating model amid the coronavirus crisis has worked wonders. This has helped the company retain nearly 80% of last year’s sales over the last six weeks of first-quarter fiscal 2021 despite store closures. Impressively, customer satisfaction scores for curbside pickup remained robust, significantly contributing to the company’s domestic online growth of 155.4% to $3.34 billion in the said period. Management has been boosting shoppers’ experiences through physical shopping with curbside pickup and in-store consultation. Its buy online, pickup-in-store services as well as Total Tech Support program and healthcare technology business also looks good. Notably, the Richfield, MN-based company has seen its shares surge 33.7% in the past three months, and carries a Zacks Rank #3 (Hold).

Finally, we have Stitch Fix, Inc. SFIX, which continues to strengthen its digital capabilities to improve client experience. This online personal-styling service company’s direct-buy service is stealing the show. This integrated facility allows clients to shop and select products directly from the company’s website or mobile app with highly personalized recommendations. Management continues to expand the facility to grab greater market share. In order to make the facility an important client-acquisition tool, the company introduced Trending For You in early June. Direct-buy revenues more than tripled quarter over quarter in the third quarter of fiscal 2020. Also, this capability largely contributed to net merchandise-revenue growth in the same quarter. The company’s active clients rose 9% year over year to 3.4 million in the fiscal third quarter. Impressively, the San Francisco, CA-based company’s shares have registered an increase of 75.9% in the past three months. The retailer has a Zacks Rank of 3.


That said, the aforesaid retailers are poised well to benefit from their e-commerce capabilities, at least in the foreseeable future. All the four companies have also outperformed the broader Retail-Wholesale sector’s 20.4% rally and the S&P 500 Index’s 13.1% growth in the past three-month time frame.

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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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