JB Hi Fi Heads For Big Year: Audio, Big TV's + In Store Demo's Set To Aid Growth
JB Hi Fi believes that gaming, audio, new TVs and Ultrabooks are set to drive sales in the second half of 2013, with the last quarter tipped to be the biggest for 2013 as several vendors get set to launch brand new technology.
The retailer, whose shares hit a new 2013 high of $16.63 on Friday, believes that the launch of new wireless audio devices, coupled with two new gaming consoles from Sony and Microsoft, will drive consumers into their stores. Many stores have been redesigned to be more demonstration-friendly than prior in-store layouts.
“The last quarter is set to be a big quarter,” says JB Hi-Fi CEO Terry Smart. “We will see several big OLED and 4K TVs introduced, along with fast new Ultrabooks, tablets and smartphones. These products, along with new wireless audio and gaming consoles, need to be demonstrated in-store, so that consumers get a full realisation of exactly what these products are capable of delivering.
“We have been working over the last two years to improve our in-store experience and live demonstrations are a critical part of the buying process,” he says.
Smart, said that the retailer is moving to expand the JB Hi-Fi online content offering, spanning music, video and books.
They are also expanding their on floor demonstration units for headphones and wireless audio and products for Samsung, LG, Sony and Telstra. He says the move to in-store demonstration units has led to increased sales for several leading brands.
Among the product categories that will deliver increased sales are audio – a category that in the past has been difficult to sell.
Several years ago, JB Hi-Fi moved to stop selling a lot of audio brands, because they were slow to move when compared to PCs and accessories.
“They took up a lot of floor space and were a considered purchase. As a result, audio products failed to sell quickly” said former JB Hi-Fi CEO Richard Uechtritz who made the decision to replace audio speaker floor space with Apple computers, iPhones and tablets.
However the audio picture has changed. “Audio is a high priority as new wireless audio products are proving very popular” said Smart.
He also admits there is a flight back to quality well-known audio brands, especially Hi Fi brands which are now marketing high quality audio output wrapped around new Bluetooth and wireless technology.
“Audio is a big opportunity for us and we are set to expand the brands we sell. We are a retailer of brands and what was perceived as an expensive high end audio brand is now affordable at JB Hi-Fi”, he says.
The company is looking for higher margin products than CDs and DVDs – such as headphones and wireless audio, along with smartphones and a new generation of large TVs.
After the digital TV explosion, which started to happen with the advent of Full HD 1080p TVs, consumers are now moving to a new generation of large TVs, including high-priced Ultra HD TVs, a move which JB Hi-Fi is moving to capitalise on, with floor space being allocated to select brands.
Analysts believe that JB Hi-Fi has several things going for it. It has very low costs of doing business, and therefore can maintain lower margins than most of its competitors.
They claim that JB Hi-Fi has many if its stores inside shopping malls, and that they benefit from passing foot traffic and impulse buys.
The company has also expanded into new areas, including an investment in JB Commercial, which recently partnered with Network Neighborhood, one of Australia’s leading network providers.
NN applies its experience, technology and knowhow to provide solutions for the specific needs of schools, places of worship and local governments.
Currently JB Hi-Fi Commercial provides IT products and services to 400 schools in Victoria as well as corporate clients. The company sees this as a $500 million opportunity by 2014.
Earlier this year, JB Hi-Fi expanded into white goods and consumer appliances, stepping into territory normally commanded by Harvey Norman and discount retailers like The Good Guys and Betta Electrical.
They have also moved into musical instruments, DJ gear, streaming music, e-books and a soon-to-be-released streaming video service.
JB Hi Fi was the first retailer in Australia to recognise the benefit that the Webcollage rich media content service delivered, with the company experiencing a lift in consumer engagement both online and in-store. The service, which is delivered by ClikFlip Digital in Australia, can lead to a 36% lift in consumer engagement.
Analysts claim that the falling Australian dollar should also help the company, with offshore online purchases now at least 10 percent more expensive.