JB Hi-Fi and WOW at odds on benefits of major promotions

Exclusive by Patrick Avenell

SYDNEY, NSW; MELBOURNE, VIC; BRISBANE, QLD: Leading retailers JB Hi-Fi and WOW Sight & Sound are split on how beneficial supplier promotions are in the lead up to Christmas.

Virtually every browngoods supplier is currently offering a free gift with the purchase of television, and whilst there’s no doubt they stimulate interest and sales, they may not generate profits to the same extent.

Richard Uechtritz, the CEO of JB Hi-Fi, said the offers currently available, which include a free PS3 from Sony, a choice of HD gifts from Panasonic and a free netbook from Toshiba, were definitely getting customers into store. When we asked him whether they were great for business or minimising upsell opportunities, he was less decisive.

“It is always very hard to make a call on it. When all of them are doing it I don’t think there’s that much upside in any of them,” Uechtritz said.

“If one or two were to do it, they might get some market share advantage over the others, but when they’re all doing it, then it seems to equal out and it’s back to normal and they’re probably better putting their money in their pockets or our pockets.”

WOW Sight & Sound director of retail, Con Nicolas, was more supportive of the promotions. He said that in modern Australia, households have a proliferation of technology, and that there are always upsell opportunities once a consumer is in store. Despite this positive view of various promotions, Nicolas said he suspected peer pressure was a motivating factor, and that there is reluctance from the suppliers to part so readily with their wares.

“When you’ve got Samsung, who’s running a promotion, and you’ve got Sony, who’s running a promotion, and you’ve got Panasonic, then of course LG’s going to respond,” Nicolas said.

“A lot of the suppliers, I don’t think they want to give the world away. In an ideal world you just sell your TV and you sell your TV at RRP, and not give away a PS3 or give away another TV and maintain and keep the margin.”

Where both Uechtritz and Nicolas agree is that the retailer doesn’t get much of say in when or what promotions suppliers will be running. Uechtritz said that suppliers do bounce ideas off him from time to time, but that his influence has thus far been minimal. Nicolas said that these decisions were out of his control.

We asked Uechtritz if he’d like more of a say.

“No, not at all, we respect them for what they do in business. We’re one of many customers and remember all the different…customers operate differently.”

Current.com.au contacted all the major suppliers running TV-based promotions this Christmas. None have availed themselves to respond to the retailers’ comments.

Should retailers have more say in major promotions? What are your thoughts on the matter? Send me an email.

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