Looking for back-to-school buys for your portfolio? This season’s consumer is on the hunt for value and brands, driving some companies that emphasize brands rather than private labels to outperform, one analyst said.
“I think there are two big trends — value,” said Adrianne Shapira, a senior retail analyst at Goldman Sachs. “Value is definitely in vogue. I mean, people are looking to stretch the dollar farther than you would imagine, and then we think there’s a bid for brands.”
Today’s shoppers cannot afford the cost of trial and error and as people look for security in their purchases, brands seem to be trumping private labels, Shapira said. Consumers also are looking for items that are on trend.
"Macy’s, Nordstrom, TJX, Ross — all the boxes that sell brands have been outperforming those that sell private label,” she said.
Shapira calledJ.C. Penney’s transformation plan “too much too soon” and “confusing for the consumer,” as shoppers question why they should pay non-coupon prices for product assortments that have not changed yet.
“Almost $3 billion in sales have been taken from J.C. Penney as they embark on transforming the whole store,” said Dana Telsey of Tesley Advisory Group.
The company’s planned shift toward in-store shops will be just beginning to debut during the crucial holiday shopping season, which is the retail industry’s high revenue period, Telsey said.
“In the meantime, it’s giving TJX , Ross Stores , Macy’s , Gap, and a bunch of other specialty retailers an opportunity to gain share,” Telsey said.
It will be difficult to make up for that lost market share, Shapira said.
“Macy’s, Kohl's, TJX, Ross are gunning for that share today, and as far as clawing that back, I think it’s going to be a tough slog,” she added.
—By CNBC.com’s Katie Little; Follow Her on Twitter @katie_little.
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Disclosures:
Tesley Advisory Group provides investment banking and other non-investment banking securities related services, and non-securities services and may seek such relationships from companies about whom it provides research.
