(Repeats, without changes, story first published on Friday)
* Game Digital re-emerges after old firm nearly went bust
* Historic firm Thomas Cook fighting back vs online rivals
* Physical stores still have advantages over Internet
* Home Retail Group has also managed turnaround
By Sudip Kar-Gupta
LONDON, Aug 1 (Reuters) - Europe's traditional High Streetretailers are defying the threat from online rivals by makingtheir businesses more efficient and in-store shopping morepleasurable.
Although overall growth trends still firmly favour onlineshopping, higher share prices flag investor faith in chains suchas UK video-game retailer Game Digital,electrical-appliance group Dixons, and Swiss Mobilezone.
Such companies have shut their less successful stores tofocus on the most profitable outlets, and have adapted to meetdemand from shoppers who, even if they buy online, often want tocollect their goods in person.
By contrast, online retailers such as ASOS and evenU.S. giant Amazon have had trouble justifying theirloftier stock-market valuations: ASOS is down 59 percent year todate and Amazon is down 20.5 percent, reflecting investorimpatience over the cost of development plans.
"Against the odds, we think that a number of (traditionalretailers) have adapted their strategies successfully and arebeginning to fight back against the online giants," said RobJones, co-head of European equities at Union Bancaire Privee.
Game Digital is one example: like fellow Britmusic-and-movies mainstay HMV, the old Game Group company wentinto administration in 2012. However, unlike HMV, it revived ina 2014 flotation after shedding half its stores and deepeningties with console-makers Sony and Microsoft.Its shares are up 7 percent since then.
Chains such as Game attract younger teenages who are lesslikely to use bank cards and therefore less likely to makepurchases online, Jones said.
CUSTOMER EXPERIENCE
The need for stores to stay relevant for online shoppers hasbeen underlined by the demise of stores that were once staplesof shopping streets and retail parks. Virgin has closed itsflagship Megastore on Paris' Champs Elysees; British electricalretailer Comet went into administration in 2012.
Electrical goods retailer Darty, whose shares aredown by around 30 percent since the start of 2014, has foughtback in its core French market by buying a popular website. Itposted higher profits in June.
UK clothing retailer Next has profited from a"click-and-collect" delivery scheme that allows customers tocollect goods ordered online straight from the store.
This chimes with recent improved performance at catalogueretailer Argos, owned by Home Retail, which said itsdecision not to cut back its extensive portfolio of Argosoutlets was justified because British shoppers were increasinglyordering online and collecting themselves.
Next shares, up 26 percent year-to-date, have outperformedASOS. Similarly, electrical-goods retailer Dixons is upby around 5 percent, helped by plans to merge with CarphoneWarehouse, while online domestic-appliances retailer AOWorld's shares have slumped 50 percent.
"Physical retailers give consumers the power to decideexactly how they would prefer to shop - something the pureonline merchants simply can't compete with," said UBP's Jones.
That pushes online retailers to go physical as well: ASOShas partnered with local convenience stores and newsagents tooffer direct collection, while Amazon also offers pick-up spots.
But they still trade at much higher valuations than theirphysical counterparts, with ASOS at a forward price-to-earningsratio of 43.92 versus a median of 14.71 for a basket of eightEuropean retail stocks.
BUMPY BOOKINGS
Travel agent Thomas Cook, which has reported itseighth straight quarterly profit rise, has benefited not justfrom cutting costs and stores but also from shopper frustrationwith increasingly complex online travel sites, investors said.
Thomas Cook's shares are down nearly 30 percent since thestart of 2014, but have still outperformed declines of 50percent or more at online rivals Bravofly and eDreamsOdigeo.
Another area that benefits from face-to-face customerrelations is telecoms: Swiss retailer Mobilezone hasopened new customer help centres and seen its shares rise bynearly 10 percent since the start of 2014.
While figures from the UK-based Centre for Retail Researchshow that online retail sales in Europe grew at double-digitrates in 2013 versus flat-to-negative rates at physical stores,strong brands are able to mix the two to their credit.
"These companies have successfully transformed themselveswhile maintaining their traditional High Street presence," saidAndrea Williams, fund manager at Royal London Asset Management. (Reporting by Sudip Kar-Gupta; Editing by Lionel Laurent/RuthPitchford)
