Jane Hali & Associates LLC released its 2021 outlook report, and identified themes that will be key for investors in the retail sector. The trends identified by the investment research firm reflect consumer preferences that emerged during the COVID-19 pandemic.
The firm said in the research report that “there have been many structural shifts by the consumer over the last year, accelerated by the pandemic,” and noted that a focus on home, wellness, outdoor lifestyles and “conscious shopping” are defining the industry.
Regarding the latter trend, analysts at the firm said “conscious shopping brands and retailers are focusing on the creation of environmentally friendly apparel, footwear and accessories,” which includes product development processes and the use of sustainable materials. With this trend, Jane Hali & Associates sees public retail companies such as Lululemon, Urban Outfitters, Target, Levi Strauss & Co. and Stitch Fix as best positioned to meet this consumer demand.
Lululemon was also a top pick to leverage the focus on wellness. “Taking care of oneself from beauty to exercise to mental health was an overwhelming trend before the pandemic,” the report stated. “COVID-19 made this trend even more popular and added to its importance.” Other retailers and brands best positioned to take advantage of this trend include Nike and Ulta Beauty, among others.
In regard to the growth of “comfy dressing” and casualwear, the firm said now that “we are used to not dressing up, casual-comfy dressing has been important. We don’t see this changing in a big way, with most offices having a hybrid model after the pandemic.” Aside from Nike and Lululemon being best positioned for this trend, the analysts cited Crocs Inc. and Deckers Outdoor Group as top picks.
Other top picks for the first half of 2021 include Williams-Sonoma and Restoration Hardware Holdings Inc. in the home goods space, and Tapestry Inc. and Capri Holdings as some of the stocks best positioned in the “digital direct” trend to consumers.
The researchers also noted the emergence of online luxury platforms this year, and expect these sites to take market share from high-end department stores in 2021. Top picks here include Farfetch Ltd. and Revolve Group.
Finally, Jane Hali & Associates said the resale market “has gained momentum during the pandemic” and noted that prior to the health crisis, “consumers were already adopting a shared economy lifestyle and it has only strengthened during the pandemic. We expect this trend to continue as more brands and retailers are adopting the resale.”
Top picks here include Levi Strauss & Co., eBay and The RealReal.
More business news from WWD: