It's official. JB Hi-Fi is acquiring home appliance retailer The Good Guys for a cool $870 million. What does this deal mean for consumers? Let's find out.
JB Hi-Fi and The Good Guys are highly complementary businesses since they have traditionally been focused on different product categories with only some overlap. A JB Hi-Fi deal with the Good Guys would form a business with sales of almost $6 billion and almost 300 stores.
“The home appliance market in Australia is circa $4.6 billion, larger than many of the other categories JB Hi-Fi operates in and presents a significant opportunity for the company,” JB Hi-Fi said in its financial presentation last month.
JB Hi-Fi has dabbled in selling whitegoods and other home appliances and the acquisition of The Good Guys will mean that it can scale up that side of its operations quickly in the back-end. This means economy of scale when buying goods from manufacturers and potential savings that could be passed on to customers.
The Good Guys itself will also have access to a wider selection of home electronics; it has traditionally focused on whitegoods while selling home electronic items on the side. JB Hi-Fi plans to open up new The Good Guys branded stores in "under represented catchment areas". It could see competition in the home goods space heat up which, again, could mean savings to consumers.
The fact that JB Hi-Fi and The Good Guys have traditionally concentrated on different product categories is a good thing for consumers. Last month, the Australian Competition and Consumer Commission (ACCC) gave the go-ahead for the deal, noting that it would not substantially reduce competition in either consumer electronics or whitegoods retailing. Harvey Norman and Bing Lee are just some of the companies that are competing in the market.
The Good Guys chief executive Michael Ford will continue to run under JB Hi-Fi’s ownership. The acquisition is expected to be completed by this year or early next year.