Earnings

Retail Chains Enjoy Brighter Prospects In Q2

Conventional wisdom insists that malls and other brick-and-mortar merchants are a doomed species of retail, given the increasing dominance of Amazon and the growing tendencies of consumers to shop via mobile devices and other computers.

Maybe. Maybe not.

The second quarter of 2018 was kind to such retailers as Target, Macy’s, Walmart and Nordstrom. The specific reasons are varied: Grocery sales, apparel, increased foot traffic, curbside delivery.

But main reason is clear to analysts:

“Wages are up. Employment is up. Interest rates are low. So it’s really a very good economic time for consumers,” Paul Hogan, a portfolio manager and analyst at Fenimore Asset Management, told The Wall Street Journal. More evidence of that comes from the SPDR S&P Retail exchange-traded fund, which “has tacked on 16% this year, including 5.6% in August alone.”

However, the long death spiral of Sears continues with the recent announcement that it would close 46 more Sears and Kmart locations, showing that not all merchants are in good shape, no matter how much they strive to come up with new concepts, or marry their physical and online efforts.

But, as a new PYMNTS in-depth story shows, some retailers are not only trying to up their competitive game against Amazon, but make sure they survive and thrive long into the 21st century.

That said, Amazon.com could hit $2.5 trillion in market cap by 2024 — fueled, in part, by the increasing importance of advertising revenue for the eCommerce operator, along with the continued role of Amazon Web Services. Earlier this month, Apple became the first U.S. company to pass the $1 trillion market cap threshold — that underscores the challenges faced by legacy retail chains.

But some retailers — notably Kohl’s — have decided that working with Amazon is the right path. The third quarter should provide more clarity about the results of such moves.

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Featured PYMNTS Study:

More than 63 percent of merchant service providers (MSPs) want to overhaul their core payment processing systems so they can up their value-added services (VAS) game. It’s tough, though, since many of these systems date back to the pre-digital era. In the January 2020 Optimizing Merchant Services Playbook, PYMNTS unpacks what 200 MSPs say is key to delivering the VAS agenda that is critical to their success.

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