COMMENT: While Harvey Norman boss Gerry Harvey spent the last six months preaching doom and gloom for the retail industry, including “massive” job losses,” his opposite number Terry Smart at JB Hi Fi was getting on with the job of delivering an increase in revenues of 5.4% with sales for the six month period ending December coming in at $1.77 Billion.The difference between the management style of Terry Smart, the former CFO of JB Hi Fi, and Gerry Harvey is very noticeable. Smart appears to know what he needs to do in a changing marketplace while Gerry Harvey is still struggling to come to grips with the fact that the market has changed, but instead of innovating he is setting up targets like GST on Internet sales and the Federal Government to blame for his problems.
At a store level Harvey Norman stores are flat and boring while JB Hi Fi oozes personality.
Back in 2007, JB Hi Fi took a decision to invest in their online operation while Gerry Harvey was still describing online as “irrelevant.” Harvey in 2007 said he doubted whether online sales would impact Harvey Norman store sales.
Earlier today Smart reported that his online sales operation grew 87.7% over the half year with December sales up 109%.
In December 1.4 million unique visitors visited the site every week compared to an average of 957,000 per week for the rest of the year.
The big difference between Harvey Norman–who is struggling to deliver increased sales–and JB Hi Fi is their attitude to staff training and marketing.
During the Xmas to New Year period I visited several JB Hi Fi and Harvey Norman stores and the big difference between the two was the attitude of staff and their knowledge of products.
At Harvey Norman, I asked one staff member about an iPod attach device: they could not answer my question. They then ran off to get someone who was supposed to know but no assistance turned up.
At JB Hi Fi Moore Park the sales assistant not only knew about the product I was interested in, they were also able to deliver a comparative sell between various iPod attach devices. They even asked the question “What have I got to do to get your business?”
Today successful consumer electronics and IT selling is no longer about having a product ranged and then banging out advertising, highlighting the fact that one is capable of selling it at the lowest price.
It’s all about creating an in-store environment where consumers feel comfortable and more importantly “excited” to be in. It’s where they see new gadgets that they want but may not necessarily be able to afford, yet once they’re convinced they will find the money to buy.
It’s about being able to range multiple products and have sales staff who can sell one product vs. another with passion and enthusiasm. Product knowledge is critical, so is being able to entice consumers to actually visit a retail store.
According to Smart he has a very nimble operation, “We own all our stores, we can make decisions quickly and get them actioned across our network within hours” he said.
“JB Hi Fi has a unique personality and we need to maintain this, our staff wants to work for us because we sell consumer electronics and IT products that they are passionate about”.
“This helps when it comes to communicating with consumers he said”.
While sales are up JB Hi Fi profits are down due to rampant discounting. Net profit for the six months to December 31 was $79.6 million, down from the previous corresponding period’s result of $87.9m, Smart said.
“Assuming trading conditions in the second half of fiscal 2012 are comparable with the first half of full-year 2012, the company expects sales in full-year 2012 to be circa $3.1 billion, a 5 per cent increase on the prior year,” the company said.
Smart said the company expected sales to improve after a “tough start” to the calendar year.
“In our view consumers were suffering from ‘promotional fatigue’ and therefore have not reacted as well to our post-Christmas promotional offers as in previous years,” he said.
