CNBC's Jim Cramer said Monday that the American consumer is thriving and that retailers can court their business if they have two things going for themselves: a strong digital presence or off-price format.
Online sales in the U.S. surpassed in-store sales for the first time in history this past February, according to the U.S. Commerce Department.
"These days, the consumer is addicted to convenience," he said. "If it doesn't have a great digital presence or incredible bargains, take a pass."
There's a generational divide in how baby boomers and millennials shop — younger patrons are less likely to shop in store than their elders, Cramer noted. Five retailers are beating their competitors because they have the necessary online presence, offer low prices, or both, he said, pointing to his new acronym of retailers with scale called WATCH — Walmart, Amazon, Target, Costco and Home Depot. Those companies have the necessary balance sheets to thrive, he added.
Cramer said Walmart, Amazon and Target had the resources to make the right investments in delivery and logistics.
"It costs a fortune to build out a working, thriving e-commerce business," he said. "What really separates these companies from the rest of retail is they can afford to spend like mad. Target may not have the wherewithal to compete directly with Amazon or Walmart, but it was very clever with its acquisition of Shipt ... which is the ultimate same day-delivery service."
Target spent $550 million on Shipt and rolled out the service in 47 states in June.
Walmart, he said, knows how to bring older consumers to shop in store. Teh company also leverages its low prices and uses its stores as distribution centers to compete with Amazon. Costco, the chain of warehouse clubs, also has an edge in offering its products in bulk for low prices to its more than 90 million members, he continued.
"I like these names the most right now for all the reasons that I hate the rest of brick and mortar. Off-price chains like TJX are the beneficiaries of all the excess inventory out there," he explained. "When department stores have too much merchandise, they sell it to these companies at a fraction of its cost."
Home Depot is offering a combination of good prices and customer service to satisfy both individual consumers and contractors, which is where the home improvement chain has an advantage over its chief rival in Lowe's, Cramer said.
"That's the one thing people are willing to happily buy in person: incredibly cheap stuff," he said.
Disclosure: Cramer's charitable trust owns shares of Amazon, Burlington and Home Depot.