Finance Finance News The future looks grim for retail, but JB Hi-Fi shows there’s hope yet

The future looks grim for retail, but JB Hi-Fi shows there’s hope yet

JB Hi Fi profit
Retailing giant JB Hi-Fi has posted a 67 per cent jump in full-year profit.
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JB Hi-Fi has managed to thrive amid an increasingly hostile retail environment that has claimed the scalps of numerous iconic brands, and the key to its success lies as much in shoppers’ experiences as it does with the store offerings.

The business managed to turn a profit of $160.1 million, up 5.5 per cent on its previous half-year earnings off the back of “record sales and earnings” during the last half of the 2018 calendar year in the same six months that saw Roger David go under and Myer report its first annual loss since it listed in 2009.

Clearly impressed by the result, investors took the price of JB shares up 5.67 per cent before it settled back down to end the day 1.77 per cent up to close at $22.92.

But the reason that a store best known for selling music and movies hasn’t gone the way of Blockbuster or Brashs has very little to do with market movements; it’s all about the in-store experience, according to chair of retail business consultancy Retail Doctor Group David Kindl.

Maintaining customer loyalty

A trip to the shops takes time and effort, and retailers need to make that time and effort a worthwhile endeavour for customers in order to survive.

That’s something that JB Hi Fi – much like Bunnings and Supercheap Auto – does well, Mr Kindl said.

“Because they’re so convenient, because their team members are fantastic, a trip to JB is a pleasure. It’s not like some other retail experiences where it’s just draining, JB’s a fun place to go,” he said.

A quick look on social media seems to back Mr Kindl’s assertion.

The business’s staff, clad in T-shirts and jeans and recognisable only by the yellow-branded lanyards hanging about their necks, play a key role, Mr Kindl said.

“It’s a great, no-pressure place to shop, but if you look around you there are offers and product everywhere. There’s not an empty space in that store,” Mr Kindl added.

A sign inside a JB Hi Fi store.
Well-designed displays encourage customers to try different products. Photo: TND

That lack of empty space is no coincidence. Dr Eloise Zoppos, a research fellow with Monash University’s Department of Marketing, told The New Daily that signage like that in JB Hi-Fi stores takes advantage of a particular behavioural trait shared by consumers.

“Shoppers enjoy the tactile experience of interacting with products, and research has found that by simply touching an object, shoppers can feel a stronger sense of ownership of the product,” she said.

“One of the ways that bricks-and-mortar retailers are making the most of this is by creating compelling, easy-to-use product displays that encourage shoppers to spend time experimenting with a diverse range of products, which you might notice is often one of the first things you see when you walk into any JB Hi-Fi store.”

All of this is the result of “very clever people” in the company’s upper echelons and should help future-proof businesses like JB and others that inspire a sense of loyalty in their customers against the onslaught of online retailers, Mr Kindl said.

“You’ll find there are plenty of other retailers doing that in Australia, and they’re the ones that will compete well with the Amazons,” he said.

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