Retail therapy might be on hold, but not every aisle is bare. Consumer spending in the United States unexpectedly slipped in May, with retail sales declining 0.9% from month-to-month, a deeper decline than the 0.6% predicted by Dow Jones economists. That follows a weak 0.1% decrease last month, which indicates that American consumers are getting increasingly cautious amid increasing economic uncertainty, tariff speculation, and overall wallet fatigue.
But the tale behind the headlines is more complex. Certain parts of the retail world, particularly those serving value-focused or internet-bright shoppers, are not only holding their own, but doing well. And savvy fund investors are capitalizing on ETFs tied to those robust categories.
ETFs That Defied The Trend
Let’s dissect the bright spots, and the ETFs set to take advantage.
E-Commerce Keeps Clicking
ETF to Watch: ProShares Online Retail ETF (NYSE:ONLN)
Top Stock Exposure: Amazon (NASDAQ:AMZN)- 24.26% weightage
As shoppers shunned physical locations and hunted for bargains online, e-commerce remained steadfast. ONLN, an ETF that follows online and non-store retailers, became popular. With a stake in players such as Amazon, the ETF capitalizes on digital convenience trends that seem resistant to tariff shakes.
Why it works: In a shaky economy, consumers don’t totally abandon their dopamine fixes, they just want it with free shipping.
Miscellaneous Retail Pops
ETF to Watch: VanEck Retail ETF (NASDAQ:RTH)
Top Stock Exposure: Amazon- 20.61% weightage
From novelty items to party favors, miscellaneous stores played strongly. Amazon, a player in this category, is its top holding. The RTH ETF, which tracks a wide range of retail players including specialty chains, picks up on this trend.
Home Sweet (Well-Furnished) Home
ETF to Watch: iShares U.S. Consumer Focused ETF (BATS:IEDI)
Top Stock Exposure: Amazon- 10.7% weightage
While housing starts and permits have been weak, furniture sales have been strong. IEDI, an ETF that offers exposure to a diversified portfolio of consumer-facing companies, is poised to ride this trend. Some are passing on the house but still buying new furniture to upgrade their present homes. Home Depot (NYSE:HD) is the top holding in the fund, with a 10.7% weightage.
What’s Holding Back Retail
Outside of auto sales, retail still declined 0.3%, below forecasts for a modest gain. Major-ticket items such as autos and home improvement products were hit hard as consumers retreated. A lot of the March spending blowout, experts say, was probably front-loaded — caused by fear of higher prices as a result of expected tariffs tied to President Trump’s “liberation day” declaration in April.
In May, that urgency dissipated. Consumers were more discerning, choosing convenience, value, and low-cost indulgences.
Selective Resilience Is The New Growth
The wider retail narrative might be fading, but zoom in and you’ll discover islands of resilience, and ETF opportunities specific to each. From digital supremacy to fast fashion and value-led stores, consumer behavior is changing, not vanishing.
These ETFs provide exposure, yes, but insulation, enabling investors to avoid the retail carnage and access where demand resides in reality today.
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