I first heard the phrase ‘retail ice age’ on Fox Business News’ Varney & Co. I don’t know if anchor Stuart Varney coined it, but it’s a pretty good assessment of the condition of bricks-and-mortar retail in America.
Sure, some down in the dumps retail stocks will bounce if the market keeps on rallying.
But beware – these stocks aren’t being bought because they’re value stocks. They aren’t even good bargains.
There’s a reason some of them are moving up, and it’s scary.
Here’s what turned the retail sector into fool’s gold, and the smartest way to make money on them…
These Dinosaurs No Longer Rule the Earth
The only issue I have with calling retail’s current situation an ice age is that it implies the sector’s merely frozen. It’s actually not.
What’s happening to bricks-and-mortar retail is more like ‘an extinction event’, like dinosaurs dying off.
That’s what I call it.
These companies and their stocks aren’t facing a cyclical correction, they’re facing a secular shift of epic proportions.
The meteor that has exploded onto the scene didn’t come from space, but from cyberspace.
Online shopping has changed everything.
Not only can online shopping be done from the convenience of your home or office, from any device, but your purchases can be shipped overnight, sometimes for free. Even when shoppers want to touch and feel something before they buy it in a store, they do their homework online and usually head to the one store where they make their final decision.
The elephant in the room is Amazon.
Amazon’s sales went from $16 billion in 2010 to $80 billion in 2016. The online retailer’s (or e-tailer’s) meteoric rise has been staggering. Several Wall Street analysts estimate that half of U.S. households are Amazon Prime subscribers (even I just became one), though the company doesn’t break out Prime members in any of its filings.
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