Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.

BATTLES on the High Street among retailers remain fierce and now another annual period of reckoning looms large. Black Friday leading into Christmas is the time many stores turn their biggest profits for the year. For others, this period may seal their fate.

It will be interesting to see if Black Friday events – which begin this week – accentuate or muffle recent trends in retail.

Results on Tuesday from the online washing machines to laptops retailer AO World came as a stark reminder of how trading has become a whole lot more challenging for some lockdown stars.

Pets at Home, on the other hand, is proving more resilient, owing much to the legacy of more than three million UK households gaining a pet during the pandemic.

Find out why the booming pet care market is proving a winner for Pets at Home and CVS Group in the latest Monty Markets Money below.

While fractured supply chains and a shortage of delivery drivers are undoubtedly limiting consumer purchases in some areas – AO World has been held back by this – greater customer mobility following the rollout of vaccines is turning into a big positive for others.

Encouraging results earlier this month from the traditional, non-food retail arms of Marks & Spencer and Primark owner AB Foods showed consumer habits returning somewhat more normal, even as the longer term trend towards online purchases persists.

These results appear to bear out the findings of KPMG and the British Retail Consortium, which detected more consumers heading out to physical stores to make purchases in October, causing online sales (42% of the total) to fall yet again.1

While the bricks-and-mortar versus online split will be keenly eyed this holiday sales season, the overall level of sales will remain crucial. Non-food UK retail sales jumped 4.2% in October by volume compared with the same month in 2020, suggesting expectations of a stronger Black Friday period this year may well be justified.2

As yet, at least, there have been precious few signs of capitulation among UK shoppers, despite the much publicised squeeze on household incomes through higher energy bills, taxes and product price rises.

In contrast, talk of a likely lack of deep discounts this year probably has foundation, as shortages of some products coupled with pent-up demand mean retailers have regained pricing power – the polar opposite of “stack them high, sell them cheap”.

Investors can gain an exposure to the UK consumer recovery via two Select 50 UK funds that are significantly overweight consumer cyclical companies.

The Fidelity Special Situations Fund currently has investments in the car dealer Inchcape – benefitting from a favourable pricing environment and its strong digital presence.

The Fidelity UK Select Fund emphasises businesses that have strong brands and robust balance sheets. Unilever – attractively valued in relation to its US peers; Burberry, which has pricing power owing to its strong luxury brands; and Auto Trader feature here.

Meanwhile for a cut of the pet care market you’ll find Proctor & Gamble in the Fidelity Global Dividend Fund and Nestle the largest holding in the Robeco QI European Conservative Equities Fund.

Source:

1 KPMG, 11.11.21
2 ONS, 19.11.21

Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. Select 50 is not a personal recommendation to buy or sell a fund. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.

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