CNBC's Jim Cramer on Monday said in the face of traditional retail's "unrelenting crunch," investors should favor retailers that are able to perform well in the face of continued inflation.
"I wish I could tell you to buy the beaten-down retailers, but the one thing I know is that buying best of breed is the way to go, and at this stage in the retail world, there are only three best of breed general merchants, and they are Walmart, Costco and Amazon," Cramer said.
Cramer sees retailers and suppliers in a struggle over who eats the cost of inflation. He said giants like Walmart and Costco are better prepared than smaller rivals to win those fights because of their size combined with the fact that many suppliers can't do business in the U.S. without being on their shelves.
"What makes Walmart and Costco so special is that, if they don't like the prices they're quoted, they can just go and make their own store brands and put them side by side," Cramer said.
He added that at Walmart sometimes the generic offering is right next to the branded offering, with seemingly little difference between the two except that one has a lower price tag.
Price pressure and convenience are driving consumers to Amazon, especially its Prime service, Cramer added. Amazon's speedy product delivery has also changed consumers' shopping habits. Consumers might be less likely to visit a Walgreens or a CVS because they can get the same products delivered on the same day to their door through Amazon, and often at a cheaper price, he said.
Sign up now for the CNBC Investing Club to follow Jim Cramer's every move in the market.
Disclaimer The CNBC Investing Club Charitable Trust holds shares of Costco and Amazon.
Questions for Cramer?
Call Cramer: 1-800-743-CNBC
Want to take a deep dive into Cramer's world? Hit him up!
Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram
Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com