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COMMENT:Why JB Hi Fi Is Still A Safe Bet

COMMENT:Why JB Hi Fi Is Still A Safe Bet

These categories include PC’s with millions of Australians set to be seduced with sexy new hybrid PC’s that make the traditional clamshell notebook look like the original Apple iPod.

These new hybrid PC’s are light combine a tablet type screen with a keyboard and are fast due to the development of new processors and battery technology that deliver longer usage and faster processing of content. 

Microsoft has just tipped millions into new merchandising displays to sell their Surface Pro 3 hybrid in JB Hi Fi stores. 

Then there is the issue of 24 bit audio, JB Hi Fi is the biggest seller of music and wireless Bluetooth audio players such as Sonos, these products are in big demand as millions of Australians move to replace docks that use to be popular with iPhone owners with Bluetooth enabled devices that link with a Hybrid PC, tablet, smartphone and a TV.

In the past digital content for a dock or player was 8 or 16bit, what will be available shortly after the music and motion picture industry agreed a standard is 24 bit audio that will see audiophiles flock back to JB Hi Fi to buy a 24 bit CD that they can digitally transfer to their expensive Hi Fi equipment.

For the millions of Australians who love music and want the best quality content they are going to have to invest in 24 bit audio players which are set to be a hot new category in the last quarter and for the next three years. 

Already several Companies are jockeying for a position in this market. Brands such as Bluesound which is distributed by Convoy, the Company that made Beats famous in Australia, will shortly launch a 24bit Bluesound range, this product will eventually be sold at JB Hi Fi stores.
 
JB HI Fi marketing Director Scott Browning tends to wait till a technology has matured and demand has been created before diving into ranging a new product category.

Another 24bit product that is already getting a following is Neil Young’s Pono player. This is set to be popular among Apple owners claim analysts.  
 
Yesterday JB Hi-Fi posted a 10.3 per cent lift in its annual net profit yesterday to $128.4 million, which was in line with forecasts.

But expectations of slowing demand for computer tablets, such as iPads, were blamed for a sales growth outlook of just 3 per cent. 

Compounding the problem was a 5.5 per cent fall in JB Hi-Fi’s revenue on a comparable basis last month, which chief executive Richard Murray insisted was mainly due to the lower level of tablet computer sales.

The core asset at JB Hi Fi is the management team, who are constantly being given offers to leave the Company. The second biggest asset is consumer perception of the JB Hi Fi brand. It is trusted by the children of millions of consumers who used to shop at the likes of Harvey Norman.

These kids are now getting into partnerships, getting married and while buying their tech gear from JB Hi Fi, they are also fuelling the demand for JB Hi Fi Home products. They are buying bright coloured small appliances, washing machines ad refrigerators and if you ask any of the major small appliance vendors about JB Hi Fi Home they will tell you that they under estimated the volume of demand that JB Hi Fi is now creating.   

I recently met up with new Chief Executive Richard Murray who believes the Company is heading in the right direction with the right product ranges. He said that the Company was not only investing in new stores but the restructure of existing stores to cater for store within a store investments by brands such as Apple, Microsoft, Samsung and smaller players such as headphone maker Sennheiser. 

He said that providing consumers with a better instore experience the Company was getting better conversion. 

Yesterday he said “We anticipate sales in the first half of the 2015 financial year will continue to be impacted by reduced tablet sales. However, we are positive about the pipeline of new products to be released and, as a result, we expect solid sales growth for the year.”

He said that management plan to open eight new stores focused on the Home category and convert a further 26 existing stores to concentrate on that part of the market. It hopes to get its total store numbers to 214 across Australia and New Zealand.

JB Hi-Fi’s net profit for the year to June 30 was helped by improving margins. Overall, sales increased 5.3 per cent to $3.48bn, or 2 per cent on a comparable basis, which was lower than original expectations in March.

Across the categories, music, movie and games sales fell 8.8 per cent while, home sales stores had 10.6 per cent sales growth post-conversion. The company’s online sales grew 13.9 per cent during the year, representing about 2.2 per cent of total sales.