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Retail Alternatives (AMZN: BUY) continues to dominate the retail industry. The company had a strong holiday season across the board in 2017, driving slightly better than average 38% sequential revenue growth (from 3Q17). Total North American retail sales grew 42%.

  • Last week, shares of Walmart Inc. (WMT: HOLD) fell sharply because on-line sales failed to match up with the long-time industry leader.
  • So how does a company compete with Amazon? Argus Senior Analyst Chris Graja, CFA, points out several strategies that retailers are adopting.

Last Man Standing: Amazon has delivered a knockout punch to book and toy stores. But in the sports category, Dicks Sporting Goods (DKS: BUY) remains a tough competitor. Best Buy (BBY: HOLD) has a strong position in consumer electronics. Genuine Parts (GPC: BUY) is in a category that has thus far resisted on-line sales.

Traffic Drivers: These retailers are able to attract customers to their stores via innovative pricing and marketing initiatives. Kroger (KR: BUY) and Costco (COST: BUY) are examples.

Turnaround: Bed, Bath & Beyond (BBBY: BUY) and Abercrombie & Fitch (ANF: BUY) are our choices in this value category.

Creators: These are retail companies that do more than distribute. Gap Inc. (GPS: HOLD) is a long-time creator in apparel. In household goods, we like Williams-Sonoma (WSM: BUY).

Special Situations: These retailers may have valuable assets, such as land, that are not priced at market value on the balance sheet, or are being targeted by an activist investor. Macy’s (M: HOLD) qualifies for land; and Advance Auto Parts (AAP: BUY) counts with activist investor Starboard Value as an owner.

Editor’s Note: For more information on these companies, please see the Argus Research Analyst Reports at

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