What is the difference between an Apple store and a JB Hi Fi store? “A flick of a switch” says Scott Browning the marketing director of JB Hi Fi who last week opened a brand new test store in the heart of Sydney’s CBD. He also warns vendors that they are now working with an economic retail model “that is very difficult to deliver a return”.According to Browning the new JB Hi Fi store is not a “concept store because it is here now, it is real.” He said neither is it a “test store”. However he does admit that the company is trialling new ways to retail consumer electronics and IT goods.
Packed to the brim with branded vendor displays the new store strategically links technology together with TVs located next to media centres and headphones located next to sound gear. The future is about “connectivity and devices that talk to each other” he said.
Browning acknowledges that the future for retailers is going to be very different from the past. “We really need a store like this to test the boundaries of where we can go. This store delivers this and what we learn will test the boundaries for the rest of our fleet of stores”.
“Categories have evolved. We are not selling metal anymore we are selling devices that talk to each other. The challenge now is how we communicate ideas in a retail environment . The challenge for the retail industry is working out how to entice, engage and evolve consumers. This is the real challenge,” said Browning.
He admits that the concept of ‘stack them high and sell them low’ retailing was a thing of the past despite this being the environment where JB Hi Fi had most success in the past.
Browning said that in the future not all JB Hi Fi stores will be same. “We have to develop for the environment where a store is located. This store in Sydney is located in a major shopping precinct, but in the future we will have to change the in-store narrative to suit the retail location,” he said.
“Everything in a JB Hi Fi store is still cheap. What we are now delivering is a better customer experience. We are delivering entertainment, empowerment and rewards. Price is still the ultimate issue and we are aware of this. Consumers are not going to pay a premium by simply walking into a smart store, retailers have to learn this if they are going to compete in the future,” he said.
When pushed as to whether the cost of operating the new stores would push up the price of goods sold in JB Hi Fi stores, he said “No, we estimate and taking into account the displays that the vendors pay for, that a store like this is going to cost around 20 percent more than our traditional stores, so doing bigger volume is critical in keeping prices down,” he said.
He said that one area where JB Hi Fi is looking to cut costs is in the automation of their displays.
“As we move to a new retail environment we have to control costs. In the morning it takes us 45 minutes to walk around a store switching on TVs, computers and all the displays. Apple, for example, has this process automated in their stores so that everything switches on at a set time. This is smart and is the sort of cost saving that we are looking to introduce,” he said.
Browning claims that the introduction of their new store will push the likes of Harvey Norman, The Good Guys and others to lift their game if they want to stay competitive in the future.
He also claims that vendors have got to change the way they market themselves in the future.
Vendor relationships
During the interview several vendors were still setting up extensive in-store displays, including Samsung, who are running a large wall display demonstrating their new Smart TV range.
“With the exception of Apple, vendors have got to lift their game. They have to work closer with us. Apple is a brand that has decided to entice and engage their customers with great retail stores for what is in essence the sale of a computer. They have set the benchmark for others to follow.”
Vendors have to understand that they now have to go beyond their products because their products are communicating with a multitude of devices and services. They are finally recognising that they have to work closer with their retail partners to deliver a new experience for consumers. Up until now they have been falling behind. They have to recognise that we are working with an economic model which is very difficult to deliver a return,” Browning added.
