Wall Street investors are increasingly leveraging alternative data sources to predict retail performance, gaining an edge during what could be a challenging holiday shopping season. Goldman Sachs (GS) is one of several firms using data from companies like HundredX, which tracks shopper sentiment through surveys, and Facteus, which analyzes credit card swipes to identify consumer spending trends. These insights are reshaping investment strategies, offering near-real-time snapshots of retail activity compared to traditional data sources like quarterly earnings reports.

HundredX, founded by a former Goldman Sachs partner, has shown how sentiment data can provide unique perspectives. For example, its surveys revealed shifting consumer intentions, such as a recent uptick in shoppers planning to return to Target (GS) after months of declining interest. Meanwhile, Facteus has detected trends like increased spending on TikTok Shop, reflecting the growing impact of social media on e-commerce. Even as some retailers like Deckers Brands (DECK) express frustration with the ubiquity of data, they are adopting these tools themselves to improve operations.

Market Overview:

• Goldman Sachs and others leverage shopper sentiment and credit card data to predict retail trends.
• HundredX identifies rising consumer intent for Target, contrasting its recent financial struggles.
• Facteus tracks spending surges, such as a 16.8% increase on TikTok Shop in early November.

• Alternative data provides near-instant insights compared to traditional quarterly reports.
• Retailers use these data tools despite concerns about potential misinterpretation.
• Data-driven investment strategies like those at Lombard Odier show up to 70% accuracy.

• Expect alternative data to play a larger role in shaping investment strategies and retail operations.
• Retailers may integrate more advanced analytics to anticipate consumer behavior.
• Data firms will likely see continued growth as investor demand intensifies.

The rise of alternative data is transforming how investors predict retail performance, enabling faster, more accurate insights into consumer behavior. Companies like Goldman Sachs and HundredX are at the forefront of this shift, using innovative tools to identify trends and inform investment decisions. This technology provides investors with a competitive edge while challenging traditional reliance on earnings reports and market intuition.

As adoption of these data sources grows, both investors and retailers will benefit from enhanced visibility into consumer trends. However, the expanding use of such data also raises questions about its interpretation and ethical implications, ensuring this will remain a critical area of focus for the financial industry.