JB Hi-Fi boss Richard Murray is now running Australia’s biggest home appliances retailer after buying The Good Guys, but he’s not about to rest in the battle for business against main rival Harvey Norman.
JB Hi-Fi announced on Tuesday it has snapped up fridges and washing machines giant The Good Guys for $870 million to eclipse Harvey Norman’s share of the consumer electronics and home appliances markets.
Murray isn’t suggesting the new scale will afford much room to relax, however.
“Harvey Norman is a great retailer and there’s a number of players in the space that play hard,” he told AAP.
“We operate on thin margins and the reality is you can buy that same box from the retailer next door, so we have to make sure we can do it better and faster than our competitors.”
The acquisition will drive JB Hi-Fi’s 19 per cent share of the consumer electronics market up to 24 per cent, beating Harvey Norman’s 15 per cent share.
And its tiny three per cent portion of the $4.6 billion home appliances market will soar to 29 per cent to surpass Harvey Norman’s 24 per cent share, according to JB Hi-Fi.
The deal will also boost its annual sales from just under $4 billion to $6 billion from a combined store count of 295 in Australia and New Zealand.
According to Ibisworld, the acquisition will create an industry behemoth in the domestic appliance retailing industry, with an estimated 31.1 per cent market share in 2016/17.
The domestic appliance retailing industry is expected to generate $13.8 billion in revenue in 2016-17, with growth of 2.4 per cent over the years five years through 2016-17.
“Acquiring The Good Guys will likely boost the group’s collective buying power, potentially increasing the combined entity’s price competitiveness in shared product segments, particularly televisions, audio equipment, computers and large home appliances,” said Brian Lo, senior industry analyst, Ibisworld.
“Harvey Norman will still command a significant share of the industry, with smaller state-based retailers such as Bing Lee, which is largely in New South Wales, and online retailers including Kogan.com providing a high degree of competition in the wider appliances market,” added Lo.
JB Hi-Fi’s purchase of The Good Guys follows months of negotiation and approval by the competition watchdog.
The Good Guys will continue to operate as an independent brand and will retain chief executive Michael Ford, who will report to Murray.
