Does JB Hi-Fi and The Good Guys need a one card loyalty program, similar to what Wesfarmers boss Rob Scott and his management team are setting up for Officeworks, K Mart, Target, Catch, and Bunnings?
Currently, Wesfarmers management is working on a new OnePass online subscription model.
This was a concept that was initially developed by the Catch Group, an operation that Wesfarmers bought for $230M in 2019.
It has legs and will prove popular with shoppers who have built a lot of loyalty around certain retail brands who they trust to deliver the range and choice that direct-sell brands lack.
The concept of a combined JB Hi-Fi and Good Guys card that clocks up points when purchases are made is a good way to fight brands who are selling the same products sold at JB Hi Fi and The Good Guys direct.
Brands like Sony, Belkin, Cygnett, Sony and many others are assessing the waters, as to how far they can push retailers when selling direct.
Harvey Norman dumped their #1 PC brand Compaq years ago, way before online selling was popular, after they discovered that the US PC brand, was set to open eight B2B stores in key locations across Australia.
Compaq argued that Harvey Norman, who at the time held over 50% of the PC market, was not doing a good job selling into the small-to-medium businesses.
The move cost them millions.
Now ChannelNews is being told that one big retailer is seriously weighing up the impact of dumping a major CE brand from their stores because they are openly spruiking sales via their own direct-sell operations.
If it happens, it will be justified and a warning shot to woke management, and at brands who believe that the days of retail are over, and that direct selling is the future.
They seem to have forgotten during COVID lockdowns that consumers love shopping and retail brands such as Harvey Norman, JB Hi-Fi, The Good Guys, as well as Bunnings and David Jones, are now seeing an uplift in store traffic.
At the same time, online retailers such as Kogan are starting to wobble as consumers return to stores and they feel the after effects of COVID.
Wesfarmers owned Catch.com.au recently reported another period of losses with an earnings before tax (EBT) loss of $43-45 million for the six months to 31 December 2021, which is only $1 million shy of its losses for the entire FY21 calendar year.
Online retailer Kogan.com’s shares have tumbled 48% during the past six months, after the group’s earnings decline was bigger than forecast just a month ago.
Investors were surprised by the bigger-than-expected 66% drop in adjusted earnings to $17.4 million that had not been flagged in the company’s January’s trading update.
Recently, Wesfarmers confirmed that they have set up a new corporate entity, called Wesfarmers A Plus, within its own board.
Its directors include Scott, as well as the CEOs of the conglomerate’s key business units including Bunnings boss Mike Schneider, Officeworks boss Sarah Hunter and Kmart Group boss Ian Bailey.
Also on the Wesfarmers A Plus board is Nicole Sheffield, the recently appointed head of digital and data for Wesfarmers, who came from Australia Post.
This is a key move that big CE and appliance retailers need to take note of, as consumers will see real value in building out loyalty value against expensive CE and appliances.
The value proposition could also see retailers leverage their relationship with brands who still want a relationship with the likes of Harvey Norman, JB Hi-Fi and The Good Guys, but at the same time want to take additional margin by selling direct.
Samsung is already building out large databases by capturing information on all consumers who buy a TV, smartphone, or appliance.
Retailers can do the same by offering a free subscription to a loyalty card, similar to what Qantas has with their Frequent Flyer program.
