Outlines company’s strategy.
During the JB Hi-Fi 2016 financial year results presentation this week, it became clear where the future growth of the business would come from.
“The home appliances market in Australia is circa $4.6 billion, larger than many of the other categories JB Hi-Fi operates in and presents a significant opportunity for the company,” JB Hi-Fi CEO Richard Murray told analysts during the results presentation.
“We aim to have 70 JB Hi-Fi Home stores at the end of FY17 and our current target of 75 Home stores should be reached during FY18,” he said.
In the 2016 financial year, ending 30 June, the overall number of ‘traditional’ JB Hi-Fi stores increased on a net basis by six stores from 173 to 179 stores.
Within this period, nine new stores were opened – five JB Hi-Fi Home stores and three traditional JB Hi-Fi stores as well as a multi-location store inside Sydney International Airport.
Over the course of the financial year, there were 13 JB Hi-Fi traditional stores re-branded as JB Hi-Fi Home.
This brought the total number of JB Hi-Fi Home stores to 59 at the end of FY16, with four of these in New Zealand – an overall increase of 16 Home stores over the period.
Six new Home stores are expected to open in FY17 with only one new JB Hi-Fi traditional store.
A further five JB Hi-Fi stores are expected to be converted to JB Hi-Fi Home in the current financial year (FY17), increasing the total from 59 stores in FY16 to 70 stores by the end of FY17 before reaching the overall target of 75 Home stores by FY18.
In his presentation, Murray explained that “our Home stores require approximately 400 square metres of additional space resulting in a total store size around 1750 square metres”.
“Stores are rebranded JB Hi-Fi Home with a full range of large and small appliances. We are targeting $3 million in incremental sales in the first full year post conversion, rising to circa $5 million over the medium term as our rollout achieves scale.”
Murray also identified a particular preference for the small appliance category which has the ability to be sold in both traditional JB Hi-Fi stores as well as the Home format stores.
“In addition to the Home roll-out, we continue to introduce small appliances to existing JB Hi-Fi stores,” Murray said in his presentation.
“We had 43 JB Hi-Fi stores with small appliances at the end of FY16, including six in New Zealand. In the long term we expect most stores to carry appliances, with the range of small appliances versus the large appliances or full home offer, tailored to suit each specific catchment area.”
With appliances now a key focus, Murray explained the changes to the business with a brief period of reflection on how the product mix has changed from when the company listed in 2004.
“Our stores are constantly evolving. We have adapted and evolved the layout of our stores as we identify ways to maintain and grow our market leadership in technology, entertainment and appliances.
“Around the time of our IPO, when we had 25 stores and turned over $400 million, our layout focused on visual and software where we dominated those categories. As we saw products start to converge we moved into computers and IT, communications, telco and games. The theme of this convergence continued and we cemented our market leadership being number one in computers as we move into 2010. More recently to accommodate our expansion into home appliances, we have expanded the physical store size, in homemaker and destination precincts to allow for our JB Hi-Fi Home format.
“In many stores in shopping centres we have re-laid these stores to enable the roll-out of small appliances and focus on our growth and emerging categories of fitness, adventure technology and expanded accessories ranges.”