For the past decade, retail has been a fascinating sector for a variety of reasons. For one, the U.S. consumer is inexhaustible, and it's fair to say that US consumption is one of the largest economic engines of the world. It's most evident through consumer spending which has trended higher for decades.

However, despite this supportive, underlying trend, the retail industry is always churning as consumer tastes are always changing. A few decades ago, the two largest retailers were Sears and JC Penney, and today both are bankrupt. So, although it seems unthinkable that Amazon (AMZN  ) or Walmart (WMT  ) could be displaced, history tells us that this is a certainty.

The last decade has been even tougher for retail due to two factors. One is that just like housing in the previous decade became oversupplied due to over-optimistic assumptions, the same happened with the buildout of retail stores. Simply put, there was too much retail square footage relative to the population. The second factor is online commerce which is taking an increasing share of people's retail spending. Not surprisingly, retailers who were able to adapt to the latter development have thrived.

Thus, many retailers were among the biggest underperformers going into the coronavirus crisis. However, on a top-down level, not much was amiss as the winners like Amazon or Home Depot (HD  ) was making up for these losses, so the sector, as a whole, remained strong.

At an initial glance, the coronavirus would be a death blow for many retailers that were holding onto life support. And, the early results did seem like this was the case as many were forced to file for bankruptcy. However, the coronavirus turned out to be a blessing in disguise for the ones that managed to survive.

They were able to take advantage of the Federal Reserve's largesse to reduce interest rate payments and bolster cash reserves. At the same time, the coronavirus gave them no choice but to adapt to e-commerce and build out their distribution channels. Today, many of these companies are seeing growth from their e-commerce divisions, and they are benefitting from the rebound in foot traffic to retail stores as the pandemic abates. For states that have totally relaxed restrictions like Texas and Arizona, retail foot traffic is about 10% higher than it was in 2019.

Despite this, many of these shares remain quite cheap as the market likely believes these improvements are transitory. However, if this narrative is incorrect, then these stocks could be in the early stages of multiyear advances. Therefore, investors should consider beaten-down retail stocks as investment options despite their recent gains.