Tuesday, February 9, 2010

"Grunge" retail cranks up the profit

Having just waxed lyrical about how good it is to see LVMH committed to leadership by design, the zero-design retail brand, JB Hi-Fi announces a 29% lift in half-year profit. Leadership by chaos in Aussie retail reigns supreme!

JB Hi-Fi is an Australian discount retailer focused on selling leading and not-so-illustrious brands at the cheapest prices. Its logo design... well.... its logo is the sort you'd expect from a $2 shop. The sort of thing one would knock together in the back room if uncertainty about the viability of the business dictated minimum investment. For those who haven't witnessed what I'm talking about, here is the JB banner

JB Hi-Fi has turned the chalk board special into a national icon. The store in Melbourne's CBD frequently drapes that black polythene sheet you normally use to line your planter boxes in its shop front window, with painted white specials writ large - similar to the internet banner only more basic! This serves the dual purpose of advertising the specials and turning the window into another wall against which you can stack all kinds of audiovisual equipment cheek by jowl in a manner to make audiophiles ashen-faced.

Step inside and it's visual overload. Bins of peripherals, CDs of all vintages, and walls of amps, speakers and flat screens. Noise levels are amazing as the amps crank up to drown out the customers and customers in turn ramp up the vocals to drown out the amps. It's competition at its finest. Audiovisual chaos through which customers navigate their way to lower prices.

No matter what you think of it, JB Hi-Fi is a retail phenomenon, striding from profit to even higher profit - a GFC-proof leviathan that's taken grunge retail national. It's unpretentious retailing, stacking money in the bank as high as it stacks the brands that it sells. The financial analysts love it as much as the bargain hunters.

And this is the difference between JB Hi-Fi and LVMH. JB Hi-Fi lives off other people's brands. It recognises it is a low-cost channel with an identity. It delivers big brands at low prices and nothing more. And note that I say 'big' and not necessarily 'best'. Not for JB Hi-Fi the audio brands for the purists. Leave that and all the overheads of specialist advice and service to the niche operators.

So you see, there is design within JB Hi-Fi's chaos. Their design lies not in their logo or presentation, but in their strategy. They are the anti-establishment member of the retail establishment. They exist to do volume - both audiovisual and financial. More blast for your buck. Nothing more and nothing less. I've already dwelt too long on this .... next reader please!

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