Narta chief executive Michael Jackson has described JB Hi-Fi Group’s decision to end its membership as mutually agreed rather than a dispute, saying both organisations concluded they needed to focus on separate priorities.
In his first public comments since the announcement, Jackson said no specific event, incident or disagreement caused the exit and that JB had not been asked to leave. He said the two sides agreed a few weeks ago that Narta should concentrate on its strategy and members, while JB Hi-Fi Group should pursue its own priorities.
Jackson said Narta remains a substantial business without JB. Core supplier purchases are worth well over $1 billion, and its members collectively account for more than 20% of the consumer electronics, camera and home appliance market, he said. That scale matters to suppliers, he added, though Narta’s role also includes services that reduce administrative and operating burdens for independent retailers.
He traced Narta’s model to its 61-year history serving independent retailers, built on the idea that collective scale helps smaller businesses compete with major chains. JB joined more than 25 years ago when it had stores in Melbourne and Parramatta, and Narta was proud to have been part of its growth into a listed company, Jackson said.
Good Guys deal changed balance
The acquisition of The Good Guys and its later inclusion in Narta brought considerable scale but also created a significant imbalance across the membership, according to Jackson. The COVID-19 period then overshadowed underlying changes as the industry enjoyed several years of extraordinary growth, with businesses focused on strong trading conditions.
He said the market is now different, and over the past six months Narta has recognised a greater responsibility to shareholders and its total membership. The group’s offer extends beyond buying to forecasting, stock-on-hand visibility, end-of-life management, new model implementation, product content and training, predictive analytics, AI and automation.
Independent members, Jackson argued, need those capabilities to survive and thrive against JB Hi-Fi, Harvey Norman and retailers such as Bunnings, Woolworths, Big W, Costco and Amazon. He said they must unite and work collectively to access the services, technology and investment required to compete and remain relevant.
Suppliers want a strong independent channel
Jackson said discussions with Nick Wells had included JB’s agreement that Narta had taken the right path over the past five to six years by investing in and building its service infrastructure. Without those investments, he said, Narta could have struggled to meet its responsibilities to members.
With JB leaving, he said members must now embrace the importance of that investment, work together and fully engage with the services. Suppliers need a strong independent channel and will challenge it if it cannot demonstrate efficiencies and a competitive cost to serve, he added. Narta expects to be judged by its collective actions over the next 12 months.
He noted that suppliers’ cost to serve continues to rise amid the economy, higher operating costs and market conditions, raising their expectations. JB Hi-Fi Group, by contrast, is a publicly listed company with four businesses — JB Hi-Fi Australia, JB Hi-Fi New Zealand, The Good Guys and e&s — and its own strategic priorities.
Since the announcement became public, Jackson said he was more confident because of the response from suppliers in the previous 24 hours. Suppliers want a strong independent retail channel and understand the importance of choice, competition and balance in the market, he said.
Costs and structure under review
Narta will no longer be the largest buying group, Jackson acknowledged, but he said it will remain number three collectively. That position still carries value for suppliers and independent retailers, he argued, even though the loss of JB’s scale is significant and will affect Narta’s income and operating costs.
As a not-for-profit organisation whose members contribute to running costs, Narta will need changes to its structure and cost base. Jackson said there would be difficult decisions, including redundancies and cost reductions across its board and executive structure. He stressed that the leadership team and board’s experience remains stable and that retaining people and capabilities is a priority.
He said Narta’s priority is to remain financially sustainable, keep the experience and capabilities needed to deliver for members and suppliers, and be structured appropriately for the future. Its purpose, he added, has not changed: strengthening independent retail, which he said is more necessary than ever.