Given anticipated heightened consumer spending during the holiday season, increasing foot traffic at physical stores, online platforms and delivery services grocery retailers should generate higher-than-usual sales through the holiday season. Therefore, we think prominent grocery retailers The Kroger (KR), Albertsons (ACI), Casey’s General Stores (CASY), and Sprouts Farmers (NASDAQ:SFM) could be solid bets now. Let’s discuss. Despite the resurgence of COVID-19 cases, rising inflation, a slowdown in third-quarter GDP growth, and supply chain logjams, retail sales have been rising since August, with a 1.7% month-over-month rise in October, owing to declining jobless claims and rising consumer spending ahead of the holiday season.
Although supply chain constraints and rising costs continue to worry grocery retailers, the rise in online grocery sales and pickup/delivery services, increasing consumer spending, and increasing foot traffic to the stores should help grocery retailers offset the consequences of inflation and benefit substantially this holiday season. The National Retail Federation (NRF) forecasts retail sales to rise between 8.5% -10.5% during November and December.
Therefore, we think fundamentally sound grocery retailers The Kroger Company (NYSE:KR), Albertsons Companies, Inc. (ACI), Casey’s General Stores, Inc. (CASY), and Sprouts Farmers Market, Inc. (SFM) could be solid bets now.