When even shopping malls are going bankrupt because of weak customer traffic at their tenants, you know the apocalypse is coming for all but the best retailers.
That means the field will be culled of the weakest players leaving more opportunity for those who remain, and investors may want to dive into these apocalypse-proof retailers before 2021 arrives.
Image source: Getty Images.
Amazon.com
Just like department stores used to serve as anchors for malls, Amazon.com (AMZN -1.64%) should serve as the online anchor store for your retail portfolio.
eMarketer estimates Amazon will see U.S. retail sales rise 17% this year to almost $261 billion, a rate 4% greater than the rise of all e-commerce sales in 2020, and its market share will increase to 38.7% from 37.3% last year.
With over 150 million members in its Prime customer loyalty program, Amazon continues to invest in the service, most recently with one-day delivery for an increasing number of goods. It notes that members saved over $1.4 billion during its recent Prime Day shopping extravaganza.
Of course, Amazon is more than just its retail operations these days, with its Amazon Web Services being the primary profit center for the company, but it's notable its U.S. retail business is now solidly profitable and even the perennial loss-making international retail segment is now in the black.
Amazon has become the end all, be all of online shopping and it won't be long before it owns half of all e-commerce sales, if not more.
Walmart
If Amazon is the anchor retailer for e-commerce, then Walmart (WMT 1.32%) plays a similar role for brick-and-mortar retailers. Even though the retail giant has a sizable online presence and has proved to be a viable rival to Amazon, especially in grocery where it leads, it is Walmart's physical presence where it is the dominating force.
Walmart has proved it is largely immune from the vagaries of changing consumer preferences, even when it has made missteps, whether from fashion faux pas or trying to minimize its signature everyday low-price policies, it's been able to bounce back. It realized on which side its bread is buttered and has leaned in to those strengths that have made it the first stop for large swaths of the public.
The coronavirus pandemic revealed it is even more essential, being allowed to stay open when smaller or specialty retail operators were forced to close. That competitive advantage allowed revenue to rise over 6% on a currency-adjusted basis last quarter as its U.S. e-commerce sales soared 79% year over year.
Now that a vaccine for COVID-19 has been approved for use, Walmart wants to be instrumental in its distribution, intending to use its 5,000 pharmacies to administer it to consumers.
There is a reason Walmart is the retail leviathan, and one that won't be changing anytime soon.
Dollar General
What the pandemic also revealed is that when large swaths of the public are forced out of work, they need a deep discount retailer to shop at to make their dollars go further.
There was no better retailer to turn to than Dollar General (DG 0.30%), leading third-quarter sales to jump 17% on a 12% increase in comparable-store sales. Profits surged 57% from last year, and now the discount retail leader is expanding its store count beyond its existing 17,000 locations.
Dollar General, which has many of its stores focused in rural areas, announced it plans to open over 1,000 new stores in 2021, while renovating another 1,750 and relocating an additional 100 stores.
With most of its products priced at $10 or less, its value proposition is obvious, but it's the expansion of fresh produce that has set Dollar General apart from the competition. Consumables account for more than three-quarters of sales and are up 20% year to date, but apparel, seasonal, and home goods are growing even faster.
Dollar General has proven to be the retailer consumers need in good times and bad.
