The share market is full of gossip about how much damage Amazon will do to the retail sector.
Some commentators seem to think Amazon will dominate instantly and end our retail giants. Others seem to think it will take Amazon years to gain traction and even then, it will be a small market share. The answer will probably be somewhere in the middle.
Either way, there are some Aussie retail shares that I think will be pretty insulated from the rise of online retail, no matter what happens. Here are a few of them:
Bapcor Ltd (ASX: BAP)
Bapcor is Australia's largest automotive parts business. Its main two businesses are Autobarn and Burson.
Burson supplies many car mechanics within two hours of the order being requested. There isn't much chance of Amazon replicating the same standard or relationship that Burson has created, which is where most of Bapcor's profit comes from.
Bapcor is trading at 22x FY17's earnings with a grossed-up dividend yield of 3.55%.
Greencross Limited (ASX: GXL)
Greencross is Australia's largest pet company with its Greencross vets and Petbarn stores.
Petbarn is the Bunnings of the pet world. Some commentators may think Petbarn is vulnerable to online shopping but I think there's a few strong mitigating factors.
Petbarn is growing its own online sales at a strong rate. Pet owners are likely to shop at a Petbarn when they go to a co-located Greencross vet. Petbarn has strong economies of scale and its own private brands, meaning it could offer the best retail prices, no matter what's online.
Greencross is currently trading at 13x FY18's estimated earnings with a grossed-up dividend yield of 5.13%.
Afterpay Touch Group Ltd (ASX: APT)
Afterpay is the 'buy now, pay later' company that helps customers buy things they can't fund immediately.
The business is rapidly growing its loan book through expansion to a growing list of retailers. The latest business to sign up was Wesfarmers Limited's (ASX: WES) Target.
Afterpay isn't yet making a profit.
Foolish takeaway
The arrival of Amazon definitely isn't the end of every retailer on the ASX. The above three businesses are all decent options and I think Greencross is very good value at the current price.
