Because the economy is reopening, discount stores are expected to benefit not only from their online sales but from growing sales by their physical stores. So, with this, we think it is wise to now scoop up the shares of discount retailers Costco (COST) and Dollar Tree (NASDAQ:DLTR). They are well positioned to benefit from the industry tailwinds. Read on.The COVID-19-pandemic-led restrictions were a massive obstacle for discount stores last year because supply chains and operations were disrupted. However, many discount retailers strengthened their online presence to benefit from the online buying trend. While online sales are already helping many discount retailers, increasing physical store sales with the reopening of the economy should help them thrive in the coming months.
Investors’ interest in the discount retail space is partly evident in the SPDR S&P Retail ETF’s (XRT) 137.8% gains over the past year compared to SPDR S&P 500 ETF Trust’s (SPY) 39.9% returns. As stores integrate data analytics into their management to streamline operations and enhance supply chain efficiency, it could lead to further growth in this space. According to Research and Markets, the global retail market is expected to grow at a 7% CAGR over the next four years.
Discount stores are expected to gain from the industry tailwinds because they offer a wide range of goods at lower prices. So, we think it is wise to bet now on Costco Wholesale Corporation (NASDAQ:COST) and Dollar Tree, Inc. (DLTR) because they are well positioned to generate significant returns in the near-term.