EXCLUSIVE: The CEO of JB Hi Fi, Terry Smart believes that the CE retailer is in a stronger position than most of his competitors because he invested early in their ability to trade online. He also claims that retailers overall have to accept the “online inevitable” and move on.The company that yesterday reported 35% growth in online trading during the past quarter treats their online operation as “just another store”.
“Right now it’s a difficult retail environment out there yet despite this we are confident that our online operations will grow significantly in 2011.
When asked whether the market was now witnessing a structural change, in the way that consumers shop in Australia, Smart said “I believe that it is still too early for us to judge whether a change is taking place.
“We are witnessing strong growth and since December when we reported 35% online growth, we have witnessed even stronger online activity. For us, we believe that the threat that online retailing poses especially coming from overseas retailers is not as big a problem for us as it is for some of our competitors”.
“At the end of the day we and other retailers have to take the threat for what it is. We have to learn to be more competitive, it is a change that’s happening in the retail environment. We have to accept it and move on”.
When asked as to why companies like JB Hi Fi and Harvey Norman were failing to capture consumer information when they shopped in their stores, unlike US stores, Smart said “Online retailing is a growing importance however it is important that we don’t slow down the transaction process. We have to transact at the fastest possible pace without affecting the transaction process. We also have to take into account the cost of acquisition of consumer data. It is an issue we are currently reviewing and we do recognise the importance of this data especially as we already have in place a successful online operation”.
“What we have to do is think of cleverer ways of capturing this data” he added.
Talking about his recent results Smart said business was tough but he was confident that JB Hi Fi can continue to deliver in the IT and Consumer Electronics markets by being niche and relevant. He said that new Tablets and Smartphones were set to be an important part of their product offering in 2011.
Smart, said that the group expected sales in financial 2011 to hit $3 billion and net profit to be in the range of $134 million to $139 million, an increase of 13 per cent to 17 per cent on earnings reported in 2009-10.
”Whilst we anticipate a volatile and competitive market in the second half, we are confident that the JB model can deliver another record year of sales and earnings” he added.
There was no doubt consumers had been affected and were being much more cautious, he said.
”But people still have a desire for the latest technology, they still want the latest computer, they still want the latest iPad, an upgraded TV, and these are highly desirable products.”
JB Hi-Fi yesterday unveiled a record half-year net profit of $87.9 million, up 15.6 per cent as sales lifted 8.3 per cent to $1.55 billion. Comparable store sales growth for the period was -1.5 per cent.
Australia was down 1.6 per cent and New Zealand up 3.9 per cent while gross margin across the business rose 44 basis points to 21.5 per cent.