Narta chief executive Michael Jackson has publicly addressed JB Hi-Fi Group's decision to end its membership in the buying and services organisation, describing the split as mutually agreed and framing it as a moment for Narta to refocus on independent retailers.
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, collectively, members represent more than 20 per cent of the consumer electronics, camera and home-appliance market. For suppliers, he said, that scale remains significant.
Scale and services beyond buying
Jackson argued Narta's value extends beyond purchasing. The organisation, which is 61 years old, was created to serve independent retailers and has focused on collective strength so independent businesses can compete with major retailers through scale.
He listed forecasting, stock-on-hand visibility, end-of-life management, new-model implementation, product content and training, predictive analytics, AI and automation among services Narta now provides. Those services, he said, are intended to help independent members compete with JB Hi-Fi, Harvey Norman, Bunnings, Woolworths, Big W, Costco and Amazon.
JB's growth and membership imbalance
Jackson recalled that when JB joined Narta more than 25 years ago, it had a store in Melbourne and a store in Parramatta, and no one could have predicted its growth into a publicly listed company. Narta was proud to have been part of that journey, he said.
The later acquisition of The Good Guys and its subsequent inclusion in Narta brought considerable scale but also created a significant imbalance across the membership, according to Jackson. COVID-19 then overshadowed many of those underlying changes as the industry experienced several years of extraordinary growth.
Mutual decision, no triggering dispute
Jackson said market conditions have changed and that over the past six months Narta has recognised a greater responsibility to shareholders and its total membership. In discussions with Nick Wells, he said, JB agreed Narta had taken the right path over the past five to six years by investing in and building service infrastructure.
He said there was no event, incident or disagreement that caused JB Group to leave, and that JB had not been asked to leave. A few weeks ago, the two organisations mutually agreed that Narta should focus on its strategy and members' needs while JB focuses on its own strategy and priorities.
JB Group is a publicly listed company with four businesses — JB Hi-Fi Australia, JB Hi-Fi New Zealand, The Good Guys and e&s — which brings its own strategic priorities, Jackson said.
Costs, structure and the independent channel
Narta will no longer be the largest buying group, Jackson acknowledged, but he said it will remain number three collectively. The loss of JB's scale is significant and will affect Narta's income and operating costs. As a not-for-profit whose members contribute to running costs, Narta will need changes to its structure and cost base.
Jackson said there would be difficult decisions, including redundancies and cost reductions across the board and executive structure. He stressed that retaining people and experience remains important, along with ensuring Narta is financially sustainable and appropriately structured for the future.
He also said suppliers want a strong independent retail channel and understand the importance of choice, competition and balance. Narta's challenge, he added, is to ensure members are connected, work together and actively use its services. Suppliers have told Narta that their cost to serve continues to rise, he said, making efficiency and competitive cost to serve essential.
Jackson said Narta's purpose has not changed: to strengthen independent retail. He argued the need for a strong, connected and commercially effective independent channel is now greater than ever, and said Narta will be judged by its collective actions over the next 12 months.