Narta chief executive Michael Jackson has spoken publicly for the first time since JB Hi-Fi Group announced it would end its membership of the buying and services organisation, describing the split as mutually agreed and rejecting any suggestion that a dispute triggered it.
In an interview with Appliance Retailer, Jackson said no event, incident or disagreement caused JB to leave, nor had it been asked to go. He said that a few weeks ago the two organisations mutually agreed the best path was for Narta to focus on its strategy and members while JB concentrated on its own priorities, pointing to JB's position as a listed company with four businesses — JB Hi-Fi Australia, JB Hi-Fi New Zealand, The Good Guys and e&s — each carrying its own strategic demands.
Narta's scale without JB
Jackson said Narta remains a strong business without the JB Group, with core supplier purchases well over $1 billion and its members collectively accounting for more than 20 per cent of the consumer electronics, camera and home appliance market. He acknowledged Narta will no longer be the largest buying group but said it will remain number three collectively, a position he described as significant for both suppliers and independent retailers.
He traced the relationship back more than 25 years, when JB joined Narta with one store in Melbourne and another in Parramatta. Narta, now 61 years old, was built to serve independent retailers, and Jackson said the organisation was proud to have been part of JB's growth into a public company.
A membership imbalance
Jackson said the acquisition of The Good Guys and its later entry into Narta brought considerable scale but also a significant imbalance across the membership. The COVID period and several years of extraordinary industry growth then overshadowed those underlying changes, he said. In a very different market today, he added, Narta has over the past six months recognised a greater responsibility to its shareholders and full membership.
He argued Narta's role now extends beyond buying to forecasting, stock-on-hand visibility, end-of-life management, new model implementation, product content and training, predictive analytics, AI and automation. During discussions with Nick Wells, he said, JB agreed Narta had taken the right path by investing in service infrastructure over the past five to six years.
Pressure on the independent channel
Jackson said independent members must unite and engage collectively with those services to compete against major retailers including JB Hi-Fi, Harvey Norman, Bunnings, Woolworths, Big W, Costco and Amazon. Suppliers want a strong independent channel and will rightly challenge it if it cannot show efficiencies and a competitive cost to serve, he said, adding that Narta will be judged on its collective actions over the next 12 months.
He noted that suppliers have said their own cost to serve keeps rising, with the economy, operating costs and market conditions affecting them as much as retailers, so their expectations are understandably higher.
Costs, structure and people
The loss of JB's scale will affect Narta's income and operating costs, Jackson said. As a not-for-profit whose members contribute to running costs, Narta will need to change its structure and cost base, with difficult decisions including redundancies and cost reductions across the board and executive structure. He said the priority is to keep Narta financially sustainable and retain the experience and capabilities needed to deliver for members and suppliers.
Jackson said supplier response in the 24 hours since the announcement had been overwhelming, reinforcing demand for a strong independent retail channel. Narta's purpose, he said, is unchanged: to strengthen independent retail, a need he believes is greater than ever.