JB Hi-Fi punts on whitegoods and appliances, rebrands failed Clive Anthony’s stores

The move by JB Hi-Fi into the homewares space is a smart one, according to Peter Esho, retail analyst at City Index.

He says JB Hi-Fi’s management has clearly come to the realisation that the physical DVDs, CDs and games which occupy a large proportion of the floor space at the stores is starting to shift online and so the retailer needs to find something to compensate.

“It’s a smart move to trial in existing stores a category that JB Hi-Fi has never been in and a category that is still quite essential to households,” he says.

While department stores are scrapping their whitegoods and appliance departments, Esho thinks JB Hi-Fi can succeed where others have failed.

“The department stores have been unsuccessful in that category because it is low margin and they don’t have a low-cost business model, but JB Hi-Fi does ,” he says.

Esho says the market’s concerns about JB Hi-Fi’s move are “overblown” and the result of a short-term focus on JB Hi-Fi when this is a more medium-term change.

“I think this is more about JB Hi-Fi trying to figure out how its business model will adapt. It is acknowledging it needs to change, which I think is very positive; many Australian businesses don’t want to acknowledge the need for change,” he says.

Esho says the launch of JB Hi-Fi HOME offers the retailer the opportunity to challenge online stores.

“Existing stores have a horrible customer experience so people buy online, as the alternative is to walk in and have to haggle, and it is inconvenient. If the shopping experience is pleasant, customers don’t have an issue going into a store,” he says.

“People still need to eat, wash their clothes and refrigerate their food, online isn’t everything as, with a lot of these products, people want to see them and measure them out.”

Esho predicts JB Hi-Fi will try a few different strategies in an attempt to compensate for the move to online shopping.

“I think this will be one of many options they will try over the next few years. It is very low risk as they are not acquiring a chain of stores, they are using their existing floor space. Suppliers will see JB Hi-Fi as the fourth largest retailer in Australia and someone they need to do business for.”