Brick-and-mortar department stores have been struggling for sales, but online outlets are thriving. As people spend more time on the internet, consumers are spending more through online catalogues, supporting the outlook for e-commerce and internet-related exchange traded funds.
Standard Chartered Plc research shows U.S. consumers are rapidly moving online, and in-store sales will likely slow down in the near future, reports Julie Verhage for Bloomberg.
“U.S. private consumption has shown ongoing resilience,” Standard Chartered analysts said, “but this macro story masks sizeable divergence at the micro level, and this explains the wide interpretation of ‘how’s the U.S. consumer doing?’ The micro story is characterized by a parabolic rise in internet sales at the expense of ‘bricks and mortar’ stores, particularly department stores.”
Specifically, Standard Chartered calculated that U.S. department store sales have dipped to under $15 billion at the end of 2015 from about $17 billion at the end of 1995. Meanwhile, internet sales have surged to $40 billion from $5 billion over the same 10-year period.
Trending on ETF Trends
Given the rapid pace of online sales growth, investors can also tap into the growing trend of online commerce through internet-related ETFs, such as the PowerShares NASDAQ Internet Portfolio (PNQI) and First Trust Dow Jones Internet Index Fund (FDN) .
Along with large internet tech names like Facebook (FB) and Alphabet (GOOG), PNQI has a 35.0% tilt toward the internet & catalog retail sub-sector, including 8.1% AMZN, 8.7% Priceline Group (PCLN), 4.2% eBay (EBAY) and 3.6% Netflix (NFLX), among others.
FDN also allocates 20.0% to consumer discretionary, including a 10.0% position in AMZN, 4.4% to NFLX and 3.8% EBAY.
The sector-specific Amplify Online Retail ETF (IBUY) targets the performance of the EQM Online Retail Index, which is comprised of global companies that generate at least 70% of revenue from online or virtual sales.
Related: IBUY: A Dedicated E-Commerce ETF
Moreover, Standard Chartered research found that consumers are also dining out more. Diners and restaurants saw U.S. sales surge to $55 billion from $20 billion over the past decade. This shift in spending on experiences may also help support the focused Restaurant ETF (BITE) , a dedicated restaurant-related ETF.
Related: Take a BITE out of a Restaurant ETF
For more information on consumer spending, visit our consumer discretionary category.