Share
market investors can be pretty cut throat. There is little room for sentiment
when your financial future is involved and the traditional retail sector is
certainly suffering as investors abandon the industry for greener pastures.
And
who can blame them? This week has seen many key US retailers reporting their
latest performance and there is little joy. Nordstrom, Macy's, and J.C.Penney
were all down last week, with the latter two showing more than 30% decline in
their share price year to date.
It
is interesting to read the analysis from share market commentators as they
encourage their clients to move out of retail. Here are some key factors -
1.
E-commerce is on the rise and the
association between e-commerce and traditional retail is at best confused.
2.
Mobile shopping or pre-shopping is on the
rise and price becomes paramount.
3.
Millennials are growing in influence but
they spend less than other groups and they are distrustful of traditional forms
of advertising.
4.
Baby boomers heading into retirement are
growing in number and retirees spend less than workers. The global population
is ageing.
5.
Global wage growth (spending power) has
slowed.
6.
Endemic decline like this could be long
term.
Obviously
the investment sector doesn't see a big future for retail but of course they
simply respond to trends, they don't determine outcomes. It is the job of
retailers to make sense out of change and create a new way forward. Investors
can thank us during the next retail bull run.