The Good Guys (Australasia)
Macro-environmental analysis
The Good Guys operates in a highly competitive Australian Smart TV industry. The TV offering in the market has rapidly evolved to become much more than an end-point content delivery gadget into an all-in-one media solution. The getting smarter of television, thus the name “Smart TV” has opened up new possibilities for TV vendors and consumers in the Australian market (Crest Retailers, 2013).
A growing consumer demand for the multi-functional services, continuous TV network digitalization together with increasing internet penetrating is substantially contributing to the Australian smart TV market to grow. The big selling of the product is its connectivity that enables streaming of a broad variety of dynamic content via the Internet same as smartphones and tablets. Different manufactures such LG and Samsung are increasingly releasing connected models of Smart TVs in the Australia markets, averaging about 40 per cent of the overall TV sales for the vendors.
The exploration of the online connectivity aspect of Smart TV among Australian consumers is still modest as many Smart TV owners still use them in the same as standard HDTVs as opposed to connecting to the Internet. The users still have little knowledge on the value proposition of the Internet capable TV though the number of exceptional users is steadily on the rise. It is yet unclear if the Australian Smart Tv consumers are purchasing the new models merely because they are currently the best in the market or particularly because they are a connectivity device. Manufacturers and vendors in the Australian TV market are still in the discovery phase of what the consumers really want as relates to apps on Smart TVs. Consumers are showing greater interest in catch-up TV, search activity and on demand movies (Crest Retailers, 2013).
The rather slow revolution of Smart TV in Australia has been as a result of an anti-competitive broadcast culture, sub-par internet speeds and a cumbersome legislative environment. However, Australia is fast playing technological catch-up and encouraging expansion of traditional players as well entry of new players. The Australia, compared to the American, is naturally smaller and greatly relies on imported content, mainly classic and new Hollywood films, library and blue-chip TV series.
The single most challenge for Australian Smart TV business is content i.e. the depth and breadth of material to offer a critical volume for consumers to choose from, along with the right blend of valuable television properties. This makes HDTV business to remain relatively dominant for the foreseeable future.
Major financial data and analysis
For the reporting year, ending 31 March 2013, The Good Guys’ financial performance was remarkable as a result of stability in the Australian economic growth that enabled companies in the consumer electronic industry to make more investments. Though the Australian dollar sustained its positive momentum during the year and the national unemployment rate remained relatively low, the general performance in the electrical and consumer electronics retail industry was generally poor. The overall sales of televisions, especially the new smart TVs, in Australia appeared to be in decline; the industry registered a contraction of 22 percent of the quantity of LCD & LED LCD televisions over the year.
This notwithstanding, The Good Guys company registered a relatively impressive financial performance during the reporting period – total sales revenue of $66.55m, which represented a 2% increase over the previous financial year. The Good Guys maintained its volume market share of smart TV sales during the reporting period.
Profit after tax for the reporting period was $2.05m, representing a decrease of 11% from the previous financial year. This decline in profitability is attributed to the more competitive landscape together with a significant reduction in foreign exchange gains.
The consolidated balance sheet below shows the major recent financial performance of The Good Guys for reporting periods.
The Good Guys
The Good Guys
The Good Guys company is optimistic of better financial performance in the following financial period due to positive projections of the Australian economy to grow by 3 percent during 2013 and 3.3 percent in 2014. While the company cannot definitively tell if there would be positive turn around for the Australian consumer electronics industry, the projected pickup in global activity for the latter part of 2013 promises to boost consumer confidence in Australia. This is expected to impact positively on the financial performance of The Good Guys company and specifically its Samsung TVs offering.
Competitor Analysis
The Good Guys Samsung Smart TV offering faces stiff competition from other brands in the Australian TV industry as well as from similar product from rivals manufacturers. The group faces competition from such popular electronic brands in Australia as JB Hi-Fi, Kogan, EA Games Australia, X-box Australia, Sony Australia, HTC Australia, EB Games Australia, PlayStation Australia, and Logitech Australia. Also, The Good Guys competes for revenue in the Australian market with popular department and online stores e.g. CatchOfTheDay, Smiggle, and Target Australia . However, the Good Guys remains the most popular retailer for dedicated appliance in the Australia (Crest Retailers, 2013).
JB Hi-Fi
JB Hi-Fi is the leading consumer electronic retailer in Australia, therefore the greatest competition for The Good Guys group. JB Hi-Fi has relatively low cost of doing business, enabling it to maintain lower margins relative to most of its competitors. This is largely due to the continuing evolution of consumer electronics particularly smart TVs, tablets, smart phones, e-readers, notebooks, laptops, wifi-enabled cameras, sports cams, and new Microsoft and Sony gaming consoles (Crest Retailers, 2013).
Also, most of JB Hi-Fi’s stores are located inside shopping malls thus reaping from passing foot traffic along with impulse buys. The market leader also continues with aggressive expansion by opening more new stores in strategic locations across the country. It has recently invested heavily in a company providing IT products and services to over 400 schools in Victoria area and to corporate clients, providing JB Hi-Fi with a $500 million potential. However, the company often faces higher costs on imports due to falling Australian dollar.
Kogan Technologies
Kogan Technologies is a major Australian manufacturer-retailer of consumer electronics devices. The company competitive advantage is on pricing of its OEM branded products sold directly to consumers, wholesalers, distributors as well as other retailers. Kogan’s controversial business model coupled with some of its advertising tactics has increased its competition as it operates mostly through offshore tax havens such as Hong Kong. Kogan is presently one of Australia’s rapidly growing companies as well as largest online retailers (Crest Retailers, 2013).
Potential future competitors
In addition, The Good Guys is threatened by potential new entrants such as Netflix, Amazon, Apple TV who are rapidly expanding their offering on the international market. Also, Google has great potential to succeed in the Smart TV industry through interweaving their content delivery, social discovery and experience with its genuine information skills (The Australian, 2013). Also, Apple can be serious competition due its expertise in developing collaborative platform, shaping belief and delivering great customer design experience.
Corporate social responsibility (CSR)
The Good Guys is active in CSR activities through its The Good Foundation, which aims to offer encouragement and support programs and initiatives for improving the health and social welfare of Australian communities. The company has also partnered with the Queensland state government to fund the launch of the inaugural Australian Ministry of Food centre located in Ipswich, Brisbane. In addition, all its chain stores participate in the Local Giving Program by donating a percentage of every in-store and online transaction.
Growth opportunity & Green Marketing
The Good Guys has a potential growth opportunity in the growing online shopping in Australia. There is large untapped potential for the Australian consumer electronics retailers to develop a profitable local online customer base as evidenced by the current and high number of Australian shoppers visiting international retail sites (The Australian, 2013). The company can seek to maximize this growth opportunity by having solid in-house support the senior management, which is lacking in many competitors. Therefore, The Good Guys need to move with speed and establish a strong online presence through green marketing of its Samsung Smart TV by end of fiscal year 2014.
References:
Crest Retailers. (2013). Our Retailers. Retrieved from: http://www.crest.com.au/Retailers.aspx
The Australian. (2013). Google shakes up the market for net-connected TV. Retrieved from: http://www.theaustralian.com.au/australian-it/opinion/google-shakes-up-the-market-for-net-connected-tv/story-e6frgb0o-1226687732145
