JB Hi-Fi sees end to deep discount campaigns

tonester on 13/02/2013 - 10:14

JB HI-FI boss Terry Smart has called an end to the aggressive price war in home electronics that last year delivered shoppers big discounts on TVs and other entertainment goods but which hacked away at retailer margins and cost hundreds of millions of dollars in sector profits.

Mr Smart said the consumer would still be in the box seat to get great deals, although they should not expect the kind of steep discounting battles that sometimes included a buy-one-get-one-free offer as leading retailers panicked and dumped stock at any price.

In general, the consumer electronics category does not have as big a price gap to close compared with other categories such as apparel and cosmetics that for years have been sold in Australia at inflated prices.

Australia has been described as ''treasure island'' by retail industry observers because hapless consumers have been overpaying relative to the rest the international community and suppliers have been making a big margin out of it.

(This is a major reason Apple and Microsoft have been ordered to appear before a parliamentary committee and explain why Australian consumers pay far more than those overseas for information technology goods).

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tonyjzx on 13/02/2013 - 10:25

delusional

they have pricing pressures from kogan big w aldis hn etc.
ozzie13 on 13/02/2013 - 10:33

+2

Price signalling?
- tonester on 13/02/2013 - 11:04
  
  +4
  
  shhh… :)
AlanHB on 13/02/2013 - 10:37

I'm not exactly an expert on business, but JB Hifi says:

"We are not saying we are not discounting," Mr Smart said. "We are just saying the market is still aggressive, it's just not doing the unsustainable [price] levels that we were witnessing last year"

But their last years profit says:

"JB Hi-Fi is now forecasting its full-year net profit to be in the range of $108 million to $112 million, up from the previous year's $104.6 million."

Aren't they making more money from having these discounts?
How is having an increased profit "unsustainable"?
Why are they stopping?

Is it a simple case of a dude looking at the books saying "hey! if we had sold these items at higher prices we would have made more money!" and the boss going "lemme see that….OMG you're right! stop those discounts!".
- chillipaste on 13/02/2013 - 11:48
  
  +1
  
  ROE not high enough
- sane on 13/02/2013 - 12:44
  
  Look at it like this. Assume the 0% margin price would be $800. If they were to be making only 5% margin, it would cost you $840. If they could price it instead at $880, they would double their profits - but to you the difference between $880 and $840 is minimal.
  
  On the big ticket items JB HiFi have a benefit that you can't import without getting stung for tax on the entire value.
  
  Therefore I's suggest they are signalling that they will push the margins on the big ticket items, and want the other Oz retailers to do the same.
  
  Given that there are only so many big TVs to be sold this year, my guess is it won't hold. Time will tell.
sparkles on 13/02/2013 - 12:38

Discounting can't cut profits if there is no one to buy at a particular price point. A $10 profit on an item you actually sell, is better than a $20 profit that sits on the shelf, gathers dust and depreciates.

JB had a marginally good year, so are getting all cocky. Consumers can turn on them as quick as lightening if they think they are being ripped off. JB should be quaking in their boots if Amazon ever turns up here. Honestly, this article almost seems to be bordering on or hinting at price collusion.
- Daabido on 13/02/2013 - 16:02
  
  I'm not that keen on Amazon coming to Australia. The prices will no doubt be higher than from the UK or US and they will probably stop us ordering from either of those two.

JB Hi-Fi sees end to deep discount campaigns

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