Narta chief executive Michael Jackson has made his first public comments since JB Hi-Fi Group announced it would end its membership of the buying and services organisation, describing the split as a mutually agreed decision rather than a dispute.
Jackson said the two organisations concluded a few weeks ago that Narta should focus on its strategy and the needs of its members, while JB Hi-Fi Group should focus on its own strategic priorities. He said no event, incident or disagreement caused the departure, and JB had not been asked to leave.
A smaller but still significant buying group
Without the JB group, Jackson said Narta remains a strong business. He put core supplier purchases at well over $1 billion and said Narta collectively represents more than 20 per cent of the consumer electronics, camera and home appliance market. For suppliers, he argued, that remains significant value.
Narta is 61 years old and was built around servicing independent retailers. Jackson said its purpose has always been to bring independent businesses together so that, through scale, they can compete effectively with major retailers. JB joined more than 25 years ago, when it had a store in Melbourne and another in Parramatta; Narta, he said, is proud to have been part of its growth into a large public company.
The acquisition of The Good Guys and its later inclusion in Narta changed the organisation significantly, adding scale but also creating what Jackson called a significant imbalance across the membership. Soon afterwards, COVID-19 hit and years of extraordinary industry growth overshadowed those underlying changes, he said.
Services become the focus
Jackson said Narta now does much more than buying. Its services include forecasting, stock-on-hand visibility, end-of-life management, new model implementation, product content and training, predictive analytics, and AI and automation. Independent members, he added, need the capabilities to survive and thrive against JB Hi-Fi, Harvey Norman, Bunnings, Woolworths, Big W, Costco and Amazon.
He said Narta had taken the right path over the past five to six years by investing in and building its service infrastructure, and that JB agreed with that assessment in discussions with Nick Wells. With JB leaving, Jackson said members must now embrace that investment, work together and actively use the services to deliver value as a collective.
Suppliers, he said, want a strong independent retail channel and understand the importance of choice, competition and balance. But they will challenge the channel if it cannot demonstrate efficiencies and a competitive cost to serve. Jackson said Narta will be judged by its collective actions over the next 12 months, particularly as suppliers face rising operating costs and tougher market conditions.
He acknowledged that JB Hi-Fi Group, a publicly listed company with JB Hi-Fi Australia, JB Hi-Fi New Zealand, The Good Guys and e&s, has its own strategic priorities. Narta will no longer be the largest buying group, Jackson said, but its members will collectively remain number three, which he described as a significant market position for suppliers and independent retailers.
Costs and people
The loss of JB’s scale will affect Narta’s income and operating costs. As a not-for-profit organisation whose members contribute to running costs, Narta will need to change its structure and cost base. Jackson said this will include difficult decisions, including redundancies and cost reductions across the board and executive structure.
He stressed that the experience of Narta’s people remains stable and that the priority is to keep Narta financially sustainable while retaining the capabilities needed to deliver for members and suppliers. The organisation’s purpose, he said, has not changed: to strengthen independent retail, with the need for a strong, connected and commercially effective independent channel greater than ever.