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4 Winning ETF Areas of U.S. Holiday Retail Sales

Sanghamitra Saha
·3-min read

Preliminary findings from Mastercard SpendingPulse reveal that U.S. retail sales, excluding automotive, have experienced a year-over-year increase of 3.1% during the holiday season, spanning from November 1 to December 24. Mastercard SpendingPulse assesses retail sales both in physical stores and online, encompassing all payment methods, without adjusting for inflation.

Michelle Meyer, chief economist at the Mastercard Economics Institute, commented on this trend, noting that consumers have been spending deliberately this holiday season. She attributed this behavior to a favorable economic environment characterized by robust job creation and alleviating inflation pressures. These factors have empowered consumers to prioritize the acquisition of their preferred goods and experiences.

Early Promotions and Strategic Shopping Define the Season

Retailers initiated promotions at an early stage this holiday season, allowing consumers ample time to seek out the best deals and special offers. Steve Sadove, senior advisor for Mastercard and former CEO and chairman of Saks Incorporated, emphasized that the season revolved around consumers maximizing the value of their spending, reflecting patterns reminiscent of pre-pandemic times.

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Amazon.com and Walmart were particularly active in offering promotions throughout November in the United States, enticing bargain hunters. However, analysts observed that these discounts were not as substantial as in the previous year, when retailers were burdened with excess inventory due to the pandemic.

Consumer Behavior and Shopping Trends

Arun Sundaram, an analyst at CRFA Research, highlighted that many shoppers opted to wait for Black Friday and Cyber Monday to make their holiday purchases. They then engaged in a final shopping sprint during Super Saturday. Sundaram noted that consumers remain active in spending but are still price-conscious, striving to maximize their budgets, as quoted on economic times.

Against this backdrop, below we highlight the winning ETF investing areas of U.S. holiday retail sales.

Apparel – SPDR S&P Retail ETF (XRT)

Apparel was one of the top categories for shoppers this season as consumers shopped for new outfits and upcoming holiday festivities. Sales in this segment was up by 2.4% year over year.

The underlying S&P Retail Select Industry Index of the fund XRT represents the retail sub-industry portion of the S&P TMI. The fund, which invests about 20% in clothing stocks, charges 35 bps in fees.

Restaurants – AdvisorShares Restaurant ETF (EATZ)

Celebrations involving food flourished, with relatives and companions congregating in dining establishments to welcome the festive season. The restaurant industry experienced a 7.8% increase compared to the previous year,

The AdvisorShares Restaurant ETF is an actively managed exchange-traded fund that seeks to achieve its investment objective by investing at least 80% of its net assets in securities of companies that derive at least 50% of their net revenue from the restaurant business.

Grocery – Consumer Staples Select Sector SPDR ETF (XLP)

The grocery sector saw a modest increase of 2.1% for the holiday period.

The underlying Consumer Staples Select Sector Index of the fund XLP seeks to provide an effective representation of the consumer staples sector of the S&P 500 Index.

Online Sales – ProShares Online Retail ETF (ONLN)

The online retail sales growth was prominent at 6.3% while in-store sales were up a more modest 2.2% year over year.

The underlying ProShares Online Retail Index of ONLN is a specialized retail index that tracks retailers that principally sell online or through other non-store channels. The fund charges 58 bps in fees.

(Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.)

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Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports

SPDR S&P Retail ETF (XRT): ETF Research Reports

ProShares Online Retail ETF (ONLN): ETF Research Reports

AdvisorShares Restaurant ETF (EATZ): ETF Research Reports

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Zacks Investment Research