JB Hi-Fi named among world’s 250 most powerful retailers: Here’s why it “will weather the storm of Amazon well”
Tuesday, January 23, 2018/
Electronics retailer JB Hi-Fi has vaulted its way into Deloitte’s annual list of the 250 largest retailers on earth, with retail experts asserting the news is further confirmation the local brand will continue to grow in a tough retail environment.
The brand, which entered the Global Powers of Retailing list for the first time in 218nd position, joins fellow Australian retail giants Wesfarmers in 21st place and Woolworths, which came in at 23rd.
The Deloitte list looks at revenue figures based on publicly available data, as well as tracking performance across country lines and product sectors. JB Hi-Fi made its way into the rankings with an estimated revenue figure of $US4.2 billion ($5.24 billion) for the 2016-17 financial year.
According to JB Hi-Fi’s 2016-17 financial year results, underlying net profit after tax for the year was up 36.5%, to $207.7 million.
Deloitte recognised the acquisition of whitegoods retailer The Good Guys in 2016, which JB Hi-Fi bought for $870 million, has contributed to positive sales numbers for the brand.
However, retail consultant John Batistich says that beyond The Good Guys purchase, JB has another key strength in its arsenal: people.
“They have staff that are young, they’re savvy, and these are the people that they rely on for their tech advice,” he says.
In a world where many consumers still want assistance setting up technology like school laptops, this kind of employee base is a valuable asset in an era of online retail, Batistich says.
A strong store network focused on service
Amazon’s Australian launch was long-feared in part because of its strong track record on quick delivery for consumer electronics.
However, Batistich says JB Hi-Fi’s large store foot print is an asset in the fight against online-only retailers.
“These stores let you pick things up when you want it,” he says.
Batistich says the split in retail will become more about “low involvement and highly transactional relationships” or “more service and advice”.
At present, consumers in Australia still want information about electronics purchases they may not know anything about, he says.
“There is some technology you’re willing to buy on Kogan and Amazon because you know what it’s going to do — but many Australians want advice,” he says.
Looking to the US, where challenges for traditional retail formats are similar, Batistich says similar people and service-focused brands have also managed to survive the wrath of Amazon.
“Best Buy is similar to JB Hi Fi in the US, and at a time when Amazon has been growing strongly, Best Buy has grown also. Because they are a people business, there to help you with the best [technology] solution, at your [choice] of time,” Batistich says.