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Zacks Industry Outlook Highlights: Amazon, Wal-Mart, Target and Rite Aid

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For Immediate Release

Chicago, IL - March 5, 2018 - Today, Zacks Equity Research discusses the Industry: Retail, Part 3, including Amazon AMZN , Wal-MartWMT , TargetTGT and Rite Aid CorporationRAD.

Industry: Retail, Part 3

Link: https://www.zacks.com/commentary/151428/retail-2018-are-retailers-problems-really-over

Change seems to be the only constant for the retail sector, which is undergoing a major transformation owing to shifting consumer preferences. While the overall outlook for the sector has been rosy following a spectacular holiday season, retailers may still have some challenges to face.

Innovation is a key factor that drives the retail sector today. Retailers continue to seek ways to find a place in customers' shopping carts by reinventing, reviving and refreshing their business models. Further, the phenomenal rise of Amazon and consolidation in the sector continue to be tough on retailers.

In 2017, the industry saw widespread closing of retail outlets, large number of bankruptcy filings and a few attention-grabbing acquisitions. Interestingly, we saw some big names like Wal-Mart and Target pursue the buyout of smaller e-commerce and direct-to-consumer brands to keep up with Amazon. Additionally, Amazon's takeover of Whole Foods had been dominating the headlines last year. Also, grocer Albertsons Companies' proposal to buy distressed drugstore retailer Rite Aid Corporation is the latest M&A activity to pull focus.

Clearly, retailers' mantra "Everything Everywhere" is here to stay. Companies are adapting to the changing retail landscape and investing heavily in digital commerce and omni-channel. Further, retailers taking a customer-centric approach, providing a sense of personalization to enhance customer experience, can help them stay ahead of the game.

Apart from these challenges, players in the sector continue to face economic bottlenecks like a relatively strong U.S. dollar, volatile commodity costs and global uncertainty. Additionally, natural calamities like hurricanes had a slight impact on the performance of retailers.

This clearly shows that the Retail-Wholesale sector is no longer a bed of roses. Some issues troubling the industry are elaborated below:

Online vs. Offline Issue: The rise of omni-channel retailing has raised consumer expectations and simultaneously problems for retailers. Today, retailers must provide a blend of online and offline experience to engage customers. Moreover, along with an impressive product assortment, pricing, shipping, returns and promotional offerings, it is necessary to introduce personalized customer services in order to satisfy consumers.

To adapt to the omni-channel model, most brick-and-mortar retailers are now investing huge sums to improve digital and e-commerce. Further, they are vying to enhance value chain by improving supply chain and distribution. This should considerably help brave competition from online biggies like Amazon.

Meanwhile, pure-play online retailers face problems in converting a browsing customer into a buyer. Consequently, e-tailers are now coming up with physical stores to attract customers. These stores will serve as a hub of advertising for making purchases on site. Additionally, huge logistics costs in shipping products to customers as well as returns are major constraints for online retailers.

Customer Experience/Personalization: Customers are no longer satisfied with the traditional endless aisles and spending long time to find products. Consumers nowadays look for an enhanced experience at the stores. They look for product engagement, personalized experience and engaging in creative sight, smell, touch and taste. This is made possible by adopting virtual reality, showrooming and other experimental retail strategies to improve in-store customer experience.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Amazon.com, Inc. (AMZN): Free Stock Analysis Report

Wal-Mart Stores, Inc. (WMT): Free Stock Analysis Report

Target Corporation (TGT): Free Stock Analysis Report

Rite Aid Corporation (RAD): Free Stock Analysis Report

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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.


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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