JB Hi Fi Charman Talks About Their Youth Brand, Parallel Importing & Selling Appliances Online
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EXCLUSIVE: As Harvey Norman moves online, JB Hi-Fi has moved to restructure their operations for what their Chairman describes will be a “record year”. He also said that the future is “low cost” retailing and that parallel importing is a “temporary issue”.

In an exclusive interview with ChannelNews JB Hi-Fi Chairman Patrick Elliott said that JB Hi Fi was Australia’s most recognised “youth brand” and that the group is still on track to open between 13 and 15 new stores, some of which will be converted Clive Anthony stores.

He said that the youth of today, who are shopping at JB HI Fi will be their customers in the future, if they “do the right thing by them. The opportunity we have to leverage that youth brand into online is significant. This is an audience that is used to online trading and recognise brand values”.

Speaking about retailers who have an older target audience Elliott said: “These retailers will reach a point where they are going to have to renew their customer set”.

He claimed that Internet trading is set to be an issue for many retailers in the future and that parallel importing is a “temporary issue” that will go away as the market re-adjusts to lower prices.

“Local manufacturers realise that they are losing control of global supply. As a result they are already starting to lower their costs in Australia in an effort to stay competitive” Elliott said.

“It will get to the stage where bringing in small shipments of goods from overseas will not be cost effective and due to the lowering of prices in Australia driven by online the market will rebalance itself” he said.

Last week, JB Hi Fi alerted the market to the restructure of their struggling Clive Anthony brand, with Elliott admitting, during a recent interview on the ABC program Inside Business, that some stores will be closed. He described Clive Anthony as an experiment “that hasn’t succeeded in its current format”.


One of the options now being considered by JB Hi Fi is to launch an online appliance store, a move which Elliott admits will appeal to a lot of consumers due to the high replacement factor that appliances attract.

“Going online makes a lot of sense. We want to be a low cost retailer. We are competing against retailers who have expensive property structures such as department stores. If department stores want to carry on selling appliance they are going to have to deliver exceptional in store service to keep attracting customers. The future is low cost which is where JB Hi Fi is operating”.

Elliott said that net profit at JB Hi Fi for the 12 months to June was now likely to be $108.5 million to $113.5 million, compared with the previous forecast of between $134 million and $139 million.

“I think there are plenty of good days still to come, we have an excellent management team at JB Hi Fi, and they love their jobs and are well rewarded for it. I think our model is right,” he said.

Elliott also said that closing down its underperforming discount electrical retailing brand, Clive Anthony’s was “one of the options” that the group was considering.

“The expectation is that we’ll be able to convert quite a few of those stores to JB Hi-Fi stores,” Mr Elliott said during his ABC interview.

“We’re looking at perhaps a change to the format for those stores, but remaining in appliance retailing, although it may be on a somewhat smaller scale, and some of those locations which aren’t profitable we will look to close.”

“The internet model is particularly well suited to do that, whereas the bricks and mortar model is less so, so this discussion is very much more around where we are with currency, perhaps, than any significant change in technology or the uptake in technology.”



Elliott said JB Hi-Fi’s online business was growing, but stressed that its “bricks and mortar” model was “very low-cost”.

“Our cost of doing business, which is everything below the gross margin line, is about 14, 14.5 per cent of sales,” Elliott said. “There wouldn’t be too many online retailers who have that low cost base, and so we’re comfortable that with our scale, our buying power and our low cost to business that we can compete quite effectively with an online retailer, and to that extent clearly pushing our own online model.”

Suppliers of software and possibly cameras would also adjust their domestic prices to match international prices thanks to the “lag effect” of the rising dollar, Elliott said.