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The Aussie retailer best placed to withstand the upcoming Christmas assault is the sleeping giant that shows signs of stirring ahead of the most important event in the retail sector – the Christmas shopping season.

The US online shopping giant has added three new categories to its website this month – outdoor clothing, automotive and pet products – and expanded its product range to 80 million stock keeping units (SKUs).

I would be surprised if Amazon doesn’t launch some marketing/promotional surprise over the next month or two. That’s great news for consumers but it’ll put more pressure on our listed retailers who are spending big to ensure their online offering can keep pace.

Super Retail Group Ltd (ASX: SUL) may feel more of the sting in the news as the new product categories on offer by Amazon puts the online site in direct competition to its outdoor and auto accessories brands, although the market knew that this would happen at some point.

But the ramp up in Amazon’s assault will put more pressure on our retailers to spend big on e-commerce with the Australian Financial Review reporting that Woolworths Group Ltd (ASX: WOW) has spent nearly $500 million on IT infrastructure and systems while Wesfarmers Ltd (ASX: WES) is committing to doubling its investment in digital and data.

Apparel and stationery retailer Premier Investments Limited (ASX: PMV) is also aggressively growing its online business with internet sales surging over 65% in FY18 to $112.5 million. Management was initially aiming to hit the $100 million mark by 2020 and its latest results tell me that online is a key management priority going forward.

Just about all other listed brick and mortar retailers are chasing the online shopper. This includes electronics and whitegoods chain JB Hi-Fi Limited (ASX: JBH) to department store Myer Holdings Ltd (ASX: MYR) – yet their share prices couldn’t be more divergent.

As important as it is, it isn’t enough to just invest heavily in digital. I think the retailers that are best placed to succeed are those with strong proprietary brands and a credible online growth strategy (that should ideally be showing good traction).

From that perspective, I think Premier Investments is a standout due to its strong execution from a proven management team.

JB Hi-Fi also has a good management team that has consistently under-promised and over-delivered. But the lack of its own brands will make things more challenging for the retailer to compete against online rivals like Amazon and Ltd (ASX: KGN).

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Motley Fool contributor Brendon Lau owns shares of Premier Investments Limited. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited and Wesfarmers Limited. The Motley Fool Australia has recommended ltd. 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 Scott Phillips.

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