Online Retail Monthly Report | March

11 March 2022

 

Online Retail ETF Monthly Report: Key Takeaways

Online Retail Like So Many Segments in Correction Territory – Online Retail, like so many disruptive-technology market segments, is in correction territory, down more than 20% YTD, shunned as a stay-at-home trade, stunted by inflationary pressures and supply-chain constraints, and facing difficult year-over-year comparisons. [1]

Global Online Retail Grew 16% in 2021 – Enhanced by new pandemic-related buying habits around the world, global ecommerce grew 16% last year. In 2022, most of the strength is expected to come from Emerging Market countries like the Philippines, India, Indonesia and Brazil, growing the fastest by at least 22%. Ecommerce is expected to grow its share of total global retail sales from an estimated 21% this year to 24.5% by 2025. [2]

US Ecommerce Sales Up 9.4% YOY in Q4 2021 –The US Commerce Department reported that non-store retail sales gained 9.4% over Q4 2020 and up 1.7% sequentially with ecommerce accounting for 12.9% of total retail sales unsurprisingly indicating that some of the traffic that moved online last year during lockdowns, has moved back into stores as the economy has reopened. [3]

Retail Shopping Habits Have Permanently Changed – While physical retail venues have reopened, shopping trends have not gone back to the way they were pre-pandemic. Just like many companies temporarily adopting remote-working practices during the pandemic are expected to continue them, many shoppers with limited online shopping experience pre-pandemic, are now firmly hooked on the practice, creating new buying habits, emerging categories, and continued sales growth. The need for a digital presence in retail has never been clearer. Fast-growing categories include social commerce, online grocery sales, and the buy-now-pay-later (BNBL) option. [4] 

Technological Innovation Creates Competitive Moat – In the old days of retail, personalized customer service created brand and store loyalty. Today, technology such as ARVR to enhance showcasing of items such as furniture in the home and AI and big data that provide a window into customer’s tastes, preferences and buying habits, collaborate to maximize customer satisfaction and drive engagement and sales.

 

 

Macro Outlook

Indiscriminate Sell-Off Creates Buying Opportunity

Facing tough year-over-year pandemic comparisons and plagued by a host of issues such as higher operational expenses due to a sudden, accelerated ramp-up of demand, compounded by supply chain shortages and inflationary pressures, online retail sits in correction territory. [5] Just like many companies temporarily adopting remote-working practices during the pandemic are expected to continue them, many shoppers with limited online shopping experience pre-pandemic, are now firmly hooked on the practice, creating new buying habits, emerging categories, and continued sales growth.  As online retailers cut costs and re-pivot to manage sales in the new normal, post-pandemic environment, online retail sales growth remains above pre-pandemic 2019 levels.  And amid the indiscriminate sell-off, strong categories with superior fundamentals will once again be rewarded.  Online retail is alive and well, and still taking over the world, with much of the new growth coming from developing markets transitioning from a cash-based to digital economies.

 

Online Retail ETF Performance (As of 28.02.2022)

 

1M

3M

6M

YTD

12M

SI

Global Online Retail UCITS ETF

-12.49%

-39.47%

-49.57%

-29.78%

NA

-50.35%

EQM Global Online Retail Growth Index

-12.26%

-39.24%

-49.28%

-29.56%

-52.29%

-49.91%

Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 28/02/2022

Performance before inception is based on back tested data. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. Source: Bloomberg / HANetf. Data as of 28/02/22. Please note that all performance figures are showing net data.

 

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