But will not lessen competition.
JB Hi-Fi’s acquisition of The Good Guys will create the domestic appliance retailing industry’s largest heavyweight, commanding an estimated 31.1% market share in 2016-17, according to IBISWorld.
The domestic appliance retailing industry is expected to generate $13.8 billion in revenue in 2016-17, with growth of 2.4% over the five years through 2016-17.
IBISWorld senior industry analyst, Brian Lo said, “Over the past five years, JB Hi-Fi has made significant strides in capturing a greater share of the domestic appliance retailing industry. The company substantially boosted its market share following the launch of its JB Hi-Fi Home stores in November 2012, which retail whitegoods, cooking and other household appliances.”
As at June 2016, JB Hi-Fi had 179 physical stores in Australia, 55 of which were JB Hi-Fi Home stores, in addition to its online presence.
“By purchasing The Good Guys, JB Hi-Fi will boost domestic appliance sales by a forecast $2.0 billion to reach $4.41 billion, while lifting its total store footprint from 179 to almost 280 stores across Australia.
“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,” Lo added.
Despite the domestic appliance retailing industry becoming increasingly concentrated, IBISWorld anticipates that it is unlikely to substantially lessen competition in the market.
“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,” Lo said.
Department stores retailing their own line of household appliances will amplify competition, with discount department stores such as Big W selling low-cost appliances.