Retail is dead, long live retail! Imperfect, but tolerable. While new approaches to the buying and selling of stuff aren’t quite as much a matter of continuing the old trend as were (as folks assumed or hoped), the succession of monarchs, the reality is that the new era is well investable in terms of quality retail REITs (retail landlords who know what they’re doing) that have to pass the profits through to shareholders.
Why This Idea Is Being Considered
It’s important before you start to read about or evaluate any idea, to know why it came under consideration be comfortable soundness of those reasons. Retail REIT Brixmor Property Group (BRX) got into my radar as a result of a High-Quality REIT screen I created on Portfolio123 that searches for the highest yields to be found among (Real Estate Investment Trusts) REITs that have been pre-qualified on the basis of strong “cash on cash returns†(a metric used by real estate investors and operators) and conservative, by REIT standards, use of debt. Details of the approach are described in a 7/5/18 blog post.
Retailing: The Non-Apocalypse
It’s easy to assume brick-and-mortar retail is dead. Who among us in this day and age is still holding out and refusing to buy things on line? I know better to suggest the number is at zero; it takes all kinds to fill a planet. But one doesn’t have to be an investigative journalist to  discover that traditional retail isn’t what it used to be; not even close.Â
It also shouldn’t take an investigative journalist to discover Amazon isn’t now100% of the sector. Even among the most enthusiastic new-tech adopters, it’s clear those wearable fitness gizmos are going to get brutal with users who spend their lives on the couch doing nothing but ordering things on line. We still get out of the house. And there are still lots of things we buy and experiences we have in real life, whether it’s for convenience shopping, fun shopping, or entertainment or even exercise.
What we have, here, is not a retail apocalypse, something that would be unconditionally bad across the board, but disruption, a bold transition to something different, something that will be good for some (those in tune with where the world is going) and horrible for others (those who remain most attuned to what used to be).
Investing in Retail
Passive exposure to retail is probably a very bad idea. We really need to pick and choose here. I took one position in the new era through an unconventional ETF called ProShares Long Online/Short Stores (CLIX) — the name says it all. But I wrote favorably just recently on women’s apparel retailer J Jill (JILL), an up and comer that seems to be growing even though it has, gasp gasp, stores.
We can and should still play retail because we really can’t ignore it; the consumer arena is still about two-thirds of GDP (a bit more at present) and pure on-line isn’t 100 percent of the distribution, and besides its mot as if you can expect a bargain with shares of pure online companies.
