The turning wheels of industry: Looking at JB Hi-Fi's climb to power

  • Opinion
  • May 24, 2016
  • Paul Keane
The turning wheels of industry: Looking at JB Hi-Fi's climb to power

Funny how the wheels of industry turn over time. A recent trip to Australia signaled yet again that changes in fortunes disrupt life for some, whilst activating it for others. At a shopping centre an iconic statue depicted two human bodies, one with the head of a dog and the other with the head of a rabbit, having a cup of tea together. Two rather conflicting likenesses, but they did signal that change is rapid and common.

The current Australasian focus is on the potential takeover by JB Hi-Fi of the Good Guys Group. Although the takeover is being talked down as just “preliminary discussions”, the likelihood is that it will happen, and when it does the control of electronic and electrical retail industry will become very centralised.

JB Hi-Fi could potentially be the largest such retailer in Australia outsizing Harvey Norman. This comes hot on the heels of the closure of Dick Smith whose name will likely be just a distant memory in a few months, as will all those Christmas shopping vouchers purchased prior to Christmas, which will lie dormant in customers’ homes before being dispatched to waste paper bins in the months and years to come.

Such a takeover will also signal the potential closure of some stores in the Good Guys brand, which will impact on landlords. You might recall that the same group came to NZ and lasted only about four years before closing.

It’s fair to say that the margins in the electronic and electrical industry are slim at best, and that competition has a habit of making it very difficult for the minor players. Sooner or later the market catches up and mergers or takeovers happen as a result. However, it’s not only this industry that has a merry go round approach.

The supermarket industry is always looking for new opportunities, and they sometimes re-emerge in locations that same industry has previously abandoned.

In years past “Woods for Goods” was a Wellington household name. Located on Willis St and also in Lambton Quay, this was a well-recognised family business that generated excellent sales from its quality merchandise. Woods for Goods could be classed as a mini supermarket or delicatessen; certainly they were a bit of both. Downtown Auckland had its version in “Hutchinson’s” which was comprised of similar merchandise.

New World have been trading for some years in Wellington on Willis Street, pretty much in the same location as Woods for Goods, and more recently Countdown have positioned themselves in Lambton Quay. It’s highly likely that Downtown Auckland will see more of the same when Precinct Properties open their new development in a couple of years. 

We have said before and we’ll say it again: The retail industry which is focussed on retailers and property development is driven by the market. Where there are people, also go the market. The re-emergence of mini supermarkets in pedestrian locations signals that people living in apartments need to be catered for.

The wheels of industry will continue to turn and evolve and maybe it’s not so odd to see a dog and a rabbit having a cup of tea together!

Paul Keane is a registered property professional and has vast experience in New Zealand’s commercial property industries. He provides retail and property consultancy including development management to many New Zealand property owners, developers and city councils. This post originally appeared on RCG's blog.

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