JB Hi-Fi will aim to pick up Dick Smith sales as Woolworths moves to offload the struggling consumer electronics chain.
Parent company Woolworths announced earlier this week it would close 100 of 389 underperforming stores across Australia and New Zealand over the next two years before selling off the brand entirely.
Dick Smith struggled under strong competition from both Australian consumer electronic retailers and online retailers able to bypass the Australian Goods and Service Tax and offer cheaper products to consumers. A review into the viability of the brand in September last year found investment in the computer chain was disproportionate to its profitability.
JB Hi-Fi CEO Terry Smart told CRN he did not agree that Dick Smith's demise should be read as a dark omen for the future of the industry. He said sticking to basic fundamentals of the retail business would safeguard JB Hi-Fi’s physical stores from the threat of global online retailers.
“We’ve got a strong model and it’s a model that has adapted over the years,” he said. “It’s a very different model today than it was twelve years ago, it continues to adapt and will continue to innovate as the market changes. If we continue to do that, we’ll have a successful business.
“[We need to focus on] the value-end of the market, unique brand personality, low cost operating model, motivated people, flexible locations, great supplier alliances and a simple business. These are what we need to hold on to.”
Smart said Australian retailers need to adapt a hybrid model to stay competitive.
“Physical retail is not going to disappear, but it’s important that you continue to give an experience,” he said. “Our brand personality means we do have an entertainment factor in store, people like to browse and educate themselves, discovering new products in an enticing environment. It’s important we maintain that.”
“Online will have its place, but people still want to be able to look at and compare and touch products. There’ll be a role for both online and physical retail now and in the future.”
Smart said the end of the 30-year old Dick Smith brand was a positive for JB Hi-Fi.
“If they’re going to be closing stores, we co-habitate in a lot of locations, and therefore any store closures, there’ll be sales which we can potentially be the recipients of.”
He confirmed JB Hi-Fi was not looking to buy any of the Dick Smith assets soon to be on the market.
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Issue: 315 | May 2013
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