Zacks Industry Outlook Highlights: Staples, Macy's, Nordstrom and Chico's FAS

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Nov 13, 2014, 09:30 ET

CHICAGO, Nov. 13, 2014 /PRNewswire/ -- Today, Zacks Equity Research discusses the Retail (part 2), including Staples Inc. (Nasdaq:SPLS-Free Report), Macy's Inc. (NYSE:M-Free Report), Nordstrom Inc. (NYSE:JWN-Free Report) and Chico's FAS Inc. (NYSE:CHS-Free Report).

Industry: Retail (part 2)

Link: http://www.zacks.com/commentary/35329/how-you-can-add-retail-to-your-portfolio-now

The retail industry has been forced to keep pace with the evolving consumer buying habits. Consumers today are knowledgeable, more inquisitive and choosier. Importantly, today's customers have numerous shopping options at their disposal like in-store, online, mobile, social media and so on, that influence their purchasing decision. Satisfying customers and enriching their buying experience require new strategies. Modern retailing, interestingly enough, is a new game with new rules.

The U.S. retail and food services sales data for Sep 2014 was up from last year but was marginally below the previous month. According to the U.S. Census Bureau, retail and food services sales rose 4.3% year over year while declining 0.3% sequentially to $442.7 billion.

Some of the trends that are expected to rule the retail sector going forward include increased technological solutions, incorporating customer feedback and targeting additional audiences with products and services.

Omni-channel Retailing the New Norm: The sluggish U.S. economy along with persistent weakness in Europe motivated retailers to focus on the buyers' needs and lure them with innovative products, attractive discounts, free shipping and the ease of shopping through smartphones and tablets. However, as these efforts failed to pay off, retailers felt the need for a better channel to connect with customers.

This gave rise to the "omnichannel" approach, which focuses on providing more touch points and multiple channels to customers. This approach facilitates the use of all possible mediums to engage consumers, including brick and mortar stores, online and mobile at the same time or alternatively.

This strategy provides customers with the ease of selecting, purchasing and exchanging a product through multiple channels. For example, a customer may select a product online, buy it through phone and exchange the same at a store without any hassle. Some retailers who are already benefiting from this strategy include Staples Inc. (Nasdaq:SPLS-Free Report), Macy's Inc. (NYSE:M-Free Report), Nordstrom Inc. (NYSE:JWN-Free Report) and Chico's FAS Inc. (NYSE:CHS-Free Report).

Personalized In-Store Experience: With evolution to the .com era and advancement of consumers, retailers are working hard to reinvent their marketing style, gradually shifting from the mass advertising and promotion format to a more personalized method to impress today's omni-channel customers. The consumers today seek a more direct communication and hence prefer to interact with an executive through their smartphone app or to chat with them on the company's website. Moreover, the customers prefer tailored offers and recommendations online as well as in stores.

Increasing Use of Mobile Wallet Technology: With everything in retail undergoing a sea change, the modes of payment used when shopping have also evolved drastically. The increasing use of smartphones, tablets and mobile technology has given rise to a new mobile application called 'mobile wallet,' through which customers can be make payments instantly by using their smartphones or tablets. Though cash and credit cards will remain the primary payment methods, the use of mobile wallet is catching up quickly among mobile users for the convenience it offers.

The popularity of this app among customers is driving retailers to adapt this payment mode by collaborating with some of the mobile wallet providers available in the market like PayPal, Google Wallet, Square Wallet, Dwolla and more.

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