In a survey conducted by The Integer Group and MARC Research, 90% of shoppers admitted to purchasing items not on their shopping list. The majority said it was due to sales, promotions, or coupons, but 28% also said that they just like to pamper themselves every now and then. Interestingly, this behavior endured even through the recession.
Retailers that pay attention to shopping trends like these are definitely worth investors' time, but what about the ones that don't?
J.C. Penney's (NYS: JCP) new pricing strategy definitely puts it in a position to lose out on impulse purchases. Not only will the lack of sales and promotions leave shoppers a bit bored, but the generally low-price brand image means shoppers won't go there to pamper themselves, either.
So where will shoppers go to get their impulsive fix instead? For a good discount, TJX's (NYS: TJX) stores like T.J.Maxx, Marshalls, and HomeGoods are clear winners. The deep discounts leave shoppers feeling triumphant, and as the company incorporates higher-end luxury labels into the stores, shoppers can also feel like they're pampering themselves.
Kohl's (NYS: KSS) and Macy's (NYS: M) also play into these trends really well, constantly running promotions and maintaining impressive sales racks. But one retailer in particular has found a way to reach every type of shopper, making itself fully accessible for all impulsive shoppers.
Nordstrom (NYS: JWN) caters to the luxury shopper with its namesake department store and corresponding website, as well as the discount shopper with the brick-and-mortar Nordstrom Rack, and HauteLook.com, a daily deals site for fashion and home. And to take it a step further, it caters to the mobile shopper with a variety of apps. It's the good kind of diversification for investors to find in a company.
Since the end of 2007, all of these companies (except for J.C. Penney) have beaten the S&P 500. Obviously a lot more goes into running a successful retailer than simply offering luxury goods and/or sales, but what it comes down to is a company's ability to know who its audience is and what they want. With that in mind, I think Nordstrom and its smart shift to digital and mobile will continue to do well.
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At the time thisarticle was published Fool contributor Amanda Buchanan holds no position in any company mentioned. Click here to see her holdings and a short bio. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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