Narta chief executive Michael Jackson has broken his silence on JB Hi-Fi Group’s decision to end its membership of the buying and services group, describing the split as a mutual decision and acknowledging that it will force structural and cost changes at Narta.
In his first public comments since the announcement, Jackson said Narta remains a substantial business without JB. Core supplier purchases are “well over $1 billion,” and its members collectively represent more than 20 per cent of the consumer electronics, camera and home appliance market. That scale, he said, remains valuable to suppliers.
Jackson argued that Narta’s role extends beyond buying. The organisation brings independent retailers together to create efficiencies, reduce administration, lower costs and minimise the investment individual businesses must make. Narta is 61 years old and was built around the collective strength of independents, he added, giving them scale to compete with major retailers.
JB joined Narta more than 25 years ago, when it had stores in Melbourne and Parramatta. Jackson said no one could have predicted its growth into “the behemoth of a public company” it is today, and that Narta was proud to have been part of that journey.
The acquisition of The Good Guys and its later inclusion in Narta changed the organisation, bringing considerable scale but also “a significant imbalance across the membership,” Jackson said. COVID-19 then overshadowed many of those underlying changes as the industry experienced several years of extraordinary growth.
He said the market is now very different. Over the past six months, Narta has recognised a greater responsibility to shareholders and its total membership. Its services now include forecasting, stock-on-hand visibility, end-of-life management, new model implementation, product content and training, predictive analytics, AI and automation.
Independent members, Jackson said, need those capabilities to survive and thrive against JB Hi-Fi, Harvey Norman, Bunnings, Woolworths, Big W, Costco and Amazon. They must unite and work collectively to access the services, technology and investment required to compete and remain relevant.
Jackson said discussions with Nick Wells led to mutual agreement that Narta should focus on its strategy and members, while JB focuses on its own priorities. JB is a publicly listed company with four businesses — JB Hi-Fi Australia, JB Hi-Fi New Zealand, The Good Guys and e&s — and has its own strategic priorities. He stressed there was no event, incident or disagreement behind the departure and that JB was not asked to leave.
With the announcement public, Jackson said he was more confident after an overwhelming response from suppliers in the past 24 hours. Suppliers want a strong independent retail channel and understand the importance of choice, competition and balance, he said. He added that suppliers’ cost to serve continues to increase as the economy, rising operating costs and market conditions affect them as well as retailers, raising expectations. Narta, he said, will be judged by its collective actions over the next 12 months.
Narta will no longer be the largest buying group, but Jackson expects it to remain number three collectively. Even so, the loss of JB’s scale will affect income and operating costs. As a not-for-profit whose members contribute to running costs, Narta will need to change its structure and cost base.
He acknowledged difficult decisions, including redundancies and cost reductions across the board and executive structure. Narta’s priority is to remain financially sustainable, retain the experience and capabilities needed to deliver for members and suppliers, and be structured appropriately for the future.
Jackson said Narta’s purpose is unchanged: strengthening independent retail. He argued the need for a strong, connected and commercially effective independent channel is now greater than ever.