Short Term Trough or Long Term Trend for Brick and Mortar Retail
The current earnings season is certainly raising the proverbial eyebrows. Market participants are potentially witnessing a theme on behalf of traditional retail companies with regard to earnings per share (EPS) and revenues. Traders and investors have kept a close eye on the trajectory of Amazon (AMZN) in recent days and weeks. The more fundamental of discussions has involved how Amazon has potentially overtaken the mannerisms and more importantly the pocket book of retail shoppers.
Most recent highs of AMZN have prompted analysts and portfolio to rethink the notion of sustainable brick and mortar retail companies. This certainly is not to suggest that the retail model cannot be sustained. This is to suggest that perhaps the existing large scale department stores and retail outlets have sincere competition from online establishments and management must find forward thinking resolutions as it pertains to the competitive edge.
The higher level thought process involves the financial habits of the consumer. The act of searching for the bargain has undertaken a more perennial role. No longer are consumers searching for aggressive pricing during specific times of the year. The consumer has become more price conscience in every aspect of acquiring goods; i.e clothing, electronics, services.
The next earnings season will be able to provide clearer guidance as it relates to the behavior of consumers and the response of large retailers.