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JB Hi-Fi acquires The Good Guys – so what does this mean for customers

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Electronics retailer JB HI-Fi has acquired The Good Guys chain of home appliances stores for $870m but the two brands will still continue to trade in their own names.

The Good Guys CEO Michael Ford made the announcement to his staff today and assured them the deal won’t affect how the company operates.

“Joining forces with JB Hi Fi makes enormous sense from every standpoint,” Mr Ford told staff and suppliers.

“We are bringing together two iconic Australian retail brands that both have tremendously strong and loyal customer bases.

“Our position and track record in home appliances is matched by JB Hi-Fi’s strength in consumer electronics and entertainment.

“Both brands stand for customer service, range and value and have always been at the forefront of their respective markets.”

The Good Guys, a privately held company, had been working towards a float on the Australian Stock Market before the offer from JB Hi-Fi came along.

One big growth area for JB Hi-Fi has been its Home stores which the company hopes will form one in three JB Hi-Fi stores by the end of the 2018 financial year – that’s up to 75 stores.

These larger JB Hi-Fi Home stores not only stock consumer electronics and entertainment like DVDs and Blu-ray Discs but also home appliances and this is where the crossover will be with the acquisition of The Good Guys.

“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,” says Brian Lo, senior analyst from IBISWorld.

“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.”

The Good Guys acquisition is expected to increase JB Hi-Fi sales by about 30 per cent annually.

“The acquisition is a very attractive strategic opportunity for JB Hi-Fi since The Good Guys is a highly complementary business which is aligned with our management philosophy and significantly enhances our offering in the $4.6 billion home appliances market,” said JB Hi-Fi chief executive Richard Murray in a statement.

The Good Guys CEO Michael Ford says the deal was accepted because the “strengths of the respective companies would be preserved”.

And all signs indicate the announcement will not impact the operation and the company will continue to operate under The Good Guys name with JB Hi-Fi doing the same.

“I’m excited to be leading The Good Guys into this next phase of growth,” Mr Ford told trusted supplier partners in an email today.

“The future for The Good Guys has never looked brighter and I have enormous confidence in our collective success.”