This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

How to Play Retail as Consumer Tightens Belt

Retail-focused ETFs have declined less than funds in many other sectors of the market, but whether they can continue outperforming is subject to debate.

Year-to-date, the PowerShares Dynamic Retail Fund (PMR), the Retail HOLDRs Fund (RTH) and the SPDR S&P Retail Fund (XRT) are down 4.5%, 6.0% and 11.3%, respectively. These funds have held up well compared with the S&P 500, which is down 13.7% so far this year.

Now, some market observers are saying the retail sector may be the next to crack.

Ken Perkins, president of Retail Metrics, sees macroeconomic conditions as being a major challenge for the retail sector.

"Certainly the next year or so is going to be dicey, to say the least," he says. "Some of the weaker players will be shaken out. Once the price of gas went above $4 a gallon, it really began to impact consumer psychology."

Perkins cites a tight job market as being a potential drag on the retail sector.

"We see job losses continuing through the rest of the year," he says. "It could be very tough sledding over the next year or so."

Changing Demographics

Potential changes in spending habits could also prove to be an obstacle for retailers in the not too distant future.

"The industry is going to be really challenged for the next few years," says Keith Springer, president of Capital Financial Advisory Services. "We are turning from a nation of spenders to a nation of savers."

Springer believes that changing demographics could lead to a decline in consumer spending.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AEO $14.32 -1.90%
ARO $0.04 -10.34%
HD $133.24 0.38%
GPS $23.06 -2.00%
TGT $79.71 -2.00%


Chart of I:DJI
DOW 17,692.18 -138.58 -0.78%
S&P 500 2,056.73 -19.08 -0.92%
NASDAQ 4,760.8580 -44.4330 -0.92%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs