Narta chief executive Michael Jackson has spoken publicly for the first time since JB Hi-Fi Group announced it would end its membership with the buying and services organisation, saying the decision was mutually agreed and was not caused by any incident or disagreement. Jackson said JB had not been asked to leave and that there was never going to be a perfect time to end the membership. A few weeks before the announcement, he said, both organisations agreed that Narta should focus on its strategy and members while JB focused on its own priorities.
Jackson said Narta remains a strong business without the JB Group. He said core supplier purchases are well over $1 billion and that Narta members collectively represent more than 20 per cent of the consumer electronics, camera and home appliance market. He described that as significant value for suppliers, while arguing Narta's real value extends beyond buying to bringing independent retailers together, creating efficiencies, reducing administration, lowering costs and minimising the investment individual businesses must make. Narta is 61 years old and was built to serve independent retailers, he added, with collective scale intended to help them compete against major retailers.
Jackson said JB joined Narta more than 25 years ago with a store in Melbourne and a store in Parramatta, and grew into a large public company. He said Narta was proud to have been part of that journey. The acquisition of The Good Guys and its later addition to Narta brought considerable scale but also created a significant imbalance across the membership, he said. COVID-19 then overshadowed many of those underlying changes as the industry experienced several years of extraordinary growth. Jackson said the market is now very different and that over the past six months Narta has recognised a greater responsibility to its shareholders and total membership.
He said Narta's work now includes forecasting, stock-on-hand visibility, end-of-life management, new model implementation, product content and training, predictive analytics, AI and automation. Independent members, he said, need the capabilities to survive and thrive against major retailers including JB Hi-Fi, Harvey Norman, Bunnings, Woolworths, Big W, Costco and Amazon. They need to unite and work collectively to access the services, technology and investment required to compete, grow and remain relevant. In discussions with Nick Wells, Jackson said JB agreed 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 fulfil its responsibilities to members.
With JB Group's departure, Jackson said it is time for members to embrace the importance of that investment, work together, fully engage with the services and deliver value collectively. He said suppliers want a strong independent channel and will rightly challenge it if it cannot demonstrate efficiencies and a competitive cost to serve. Narta will be judged by its collective actions over the next 12 months, he said. Jackson also said suppliers have reported rising costs to serve, with the economy, operating costs and market conditions affecting them as much as retailers. JB, he noted, 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.
Jackson said the response from suppliers in the 24 hours after the announcement had made him more confident, and that suppliers want choice, competition and balance in the market. He acknowledged that Narta will no longer be the largest buying group but said it will collectively remain number three, a significant position for suppliers and independent retailers. The loss of JB's scale is significant, he said, 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. He said there will be difficult decisions, including redundancies and cost reductions across the board and executive structure, but that retaining people and experience remains important. Jackson said Narta's priority is financial sustainability and the capabilities needed to deliver for members and suppliers, adding that its purpose to strengthen independent retail has not changed.