Huge value/growth shift in the sector yesterday on the positive news from the Pfizer/BioNTech COVID vaccine trial, which shows where future sector outperformance may come from over the next 6-12 months. While 7 stocks in our universe were up by double digits yesterday, there is still material potential upside as these share prices are down between 21%-76% YTD (see Figure 2). Vaccine relative outperformers were those most impacted by the pandemic to date, namely WH Smith (Travel/High Street exposure), Greggs (Food to go), Card Factory (High Street), and the more physically exposed clothing retailers such as AB Foods via Primark and M&S. Those sold off were the pure play online players, which have benefitted from the acceleration in the structural shift online, and those ‘stay at home’ stocks, helped by the switch to spending on the home from leisure, such as Kingfisher, B&M, and Dunelm. B&M benefitted from its status as an essential retailer, though good momentum has continued suggesting it may have permanently grown its market share and customer base. While the structural shift online is not going to reverse, we believe DIY and homeware might struggle next year given the tough comparables and a switch back in consumer spending to leisure and experiences, e.g. holidays. Retail still needs to get through Christmas, the fourth stage to survival as discussed in Four hurdles to survival (10/6/20) with a second UK lockdown adding to the challenge (see Will Christmas be cancelled? 2/11/20) and uncertainty. Then there is the possibility of a hard Brexit adding to the pressure. 2021 is expected to be equally as challenging for Retail with demand unlikely to return to pre-pandemic levels (2019 levels). Firstly, the roll-out of a successful vaccine will take time and so ‘normality’ is unlikely to return quickly. Secondly, we expect a deteriorating macro environment as the inevitable rise in unemployment weighs heavily on consumer sentiment and demand. Actions taken and investments made now by companies are likely to define future performance for years to come with technology investment needed to increase agility and help tackle long-term structural pressures. The Retail sector is likely to be seen as more investible if there is a successful vaccine and indeed a Brexit deal. The more attractive value plays in the sector are Card Factory, TheWorks.co.uk, WH Smith and Greggs, in our view, assuming a vaccination programme starts next year. We expect M&S to emerge in a better market position and could see a strong rebound in its clothing business. We continue to like the more consistent, proven growth stories like JD Sports, Watches of Switzerland and B&M where there is upside risk to forecasts. Our Sell recommendations are Kingfisher and Superdry.