JB Hi-Fi is set to move headlong into the second hand games software market much to the angst of games vendors such as Sony and Microsoft.
Talking to SmartHouse magazine, the company’s Managing Director Richard Uechtritz said that a key growth sector for JB Hi-Fi, which is predicting 33 per cent sales growth this year, was the trading of second hand games for the Sony Playstation, Xbox and the Nintendo Wii.
The company that is currently stockpiling used games is set to take on EB Games, which was one of the first company’s to introduce the concept in Australia.
Said Uechtritz, “The trading of second hand games and consoles is a high growth area as we not only deliver profits from trading a game but when a customer buys a new game. We are confident of our success and across the board we are building stock of second hand games”.
However the move has not gone down well with the games vendors. The Managing Director of Sony Computer Entertainment Michael Ephraim said, “We are well aware of JB Hi-Fi’s intent and while we don’t like it there is nothing we can do about it as it is quite legal”.
He added, “The move does impact sales of older titles particularly for the PS2 which is the largest selling console in Australia today. EB Games started the practise and we are going to just have to live with it”
A Microsoft executive who did not want to go on record said, “We do not agree with a retailer like JB Hi Fi selling second hand games as it not only impacts sales of new games but erodes margin for not only Microsoft, but third party games developers”.
An EB Games store Manager in Sydney said “I am not supposed to say this but the games vendors hate us selling second hand games. It is a highly succesful area of our business and often drives consumers into stores to make a new purchase. Initially the games vendors tried to threaten us but when they realised that we were serious about selling second hand games they backed off”.
Overall JB Hi-Fi has been trading well with Uechtritz claiming that two other growth categories were computers and communication products such as mobile phones and accessories.
He said, “Current trading has continued to be strong, in line with that experienced in the second half of last financial year.” Comparative store sales growth continues to be in the double digits, he claimed.
“We are confident about trading going into the Christmas and New Year period,” he added.
December is the home entertainment trader’s key sales season with a growing proportion of its products now in gift related categories.
The retailer’s boss said the period was the major determinant of whether the momentum in the early part of the year would be reflected in the 2008 full year result.
Mr Uechtritz based his buoyant outlook on expectations of continuing economic growth and near full employment underpinning consumer confidence and spending.
“We do not expect the election to have any effect on consumer confidence with commentators suggesting an equal economic stimulus under either party,” he said.
By Christmas the retailer will have opened 15 new outlets, including its first in Hobart.
Chairman Patrick Elliott attributed much of the retailer’s success to its capacity to satisfy Australians’ endless appetite for new technology.
Plasma and LCD televisions, MP3 players and DVD recorders continue to be hot ticket items for the retailer.
It has also established itself in the games market and more recently moved into computers and mobile phones.
“The company continues to shift its product mix to be an early leader in new technologies promising high growth and significant volume,” Mr Elliott said.
In August the retailer posted a net profit of $40.39 million for 2006/07 – up 56.5 per cent on the previous year.
That result came on the back of $1.28 billion worth of sales, a 35.5 per cent increase on the previous year.
JB Hi-Fi shares were up 60 cents, or 3.71 per cent, to $16.79 at 1504 AEDT on Tuesday.