The retail industry is as fiercely competitive as they come. You only have to look at the disappointing demise of Dick Smith to see how fierce things can be. One minute the company looks like it has everything going for it, then suddenly it is falling into administration.

Two companies which will be vying for the market share given up by Dick Smith are JB Hi-Fi Limited (ASX: JBH) and Harvey Norman Holdings Limited (ASX: HVN). Both companies are positioned to profit from Dick Smith’s absence from the space, but which should you be invested in today?

Whilst both companies look attractive at their respective share prices, I do have a preference for Harvey Norman at present.

This is largely down to the geographical diversification of its operations. Because it has franchises across the world it will be less affected by a slowdown in the Australian retail market should one happen.

Furthermore, with the Australian dollar expected by many to decline in the next few months, it should be a boost to its results once again. In its interim results the company advised that global sales were positively impacted by a 5.5% appreciation in the Euro and a 16.1% appreciation in the UK Pound.

JB Hi-Fi just has a small number of operations in New Zealand, contributing around 5% of its total revenue. So for me it lacks the geographical diversity that makes Harvey Norman an attractive investment in the retail industry.

Another factor which I feel puts Harvey Norman ahead of JB Hi-Fi, is that it is better positioned to profit from Australia’s housing market boom. By selling furniture, kitchen appliances, and electronics it has everything that homeowners could possibly need.

Priced at 17x earnings makes it a touch more expensive than JB Hi-Fi. But its earnings are expected to grow at nearly 11% per annum for the next couple of years, compared to JB Hi-Fi’s 5.5%. I believe that this more than justifies the higher valuation.

Time will tell which proves to be the better investment from this point on, but my money would be on Harvey Norman. I believe Australian retail shares like Harvey Norman and Premier Investments Limited (ASX: PMV) will outperform their peers due to the fact they have thriving international businesses. This sort of performance can be hard to find on the ASX, but it is out there. For example that these three blue-chips could be about to soar is proof of that.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.