Data-Driven Insights: Wall Street's New Tool

Alternative data is reshaping Wall Street's approach to gauging retailer performance this holiday season. Investors, like Goldman Sachs, use non-traditional data sources such as shopper sentiment and credit-card swipes to gain a competitive edge. Firms like HundredX and Facteus provide insights that challenge traditional retail industry assumptions.

As the holiday season approaches, Wall Street firms, including Goldman Sachs, are leveraging alternative data to monitor shoppers' behaviors and intentions, seeking to identify retail winners and losers. This trend highlights an industry shift from traditional data reliance, including earnings reports, to more innovative sources like shopper sentiment and credit-card swipe data.

An example is HundredX, a data firm supplying shopper sentiment analysis to Goldman Sachs for equity research. Founded by former Goldman partner Robert Pace, HundredX collaborates with non-profits to gather purchase intention data, anticipating consumer trends. The firm's approach is part of a broader adoption of alternative data, with companies like AlphaROC and Facteus offering insights into future consumer actions.

The utilization of alternative data to understand retail dynamics has generated mixed reactions. Retail executives like Dave Powers cite concerns over data being taken out of context, even as they themselves employ it for performance measurement. Nevertheless, firms such as Lombard Odier Investment Managers are embracing these insights, incorporating them into strategies to predict market movements and consumer trends.

(With inputs from agencies.)