The hits keep coming for Australian traditional retailers

Cooling off during the San Diego Marathon in California. Sean M. Haffey/Getty Images for Rock’n’Roll Marathon
  • Retail stocks took a dive after announced a move into whitegoods.
  • The move just adds yet more competitive pressure in a market being eaten into by online retailers, including US giant Amazon.
  • And it comes at a time when a downturn in housing prices means less spending on furniture and appliances.’s move into whitegoods has retail shares on the run with comments by founder Ruslan Kogan suggesting aggressive discounting is on the way.

The share price of Australian retailers took a hit after the announcement by the pure-play online retailer. Harvey Norman fell 2.77%, JB Hi-Fi 3.27% and Myer 4.55%.

Official numbers show Australian retail sales grew by a paltry 2.6% in the 12 months to April, reflecting subdued growth in household incomes and intense competition.

About 60% of total growth in sales over the past year came from online retailers and the move by just adds yet more competitive pressure on top of the growing presence in Australia of US giant Amazon.

The Coppo Report noted the comment from Ruslan Kogan: ” … market lacks competitive tension which has resulted in a limited number of players enjoying inflated margins.”

This suggests will be an aggressive price competitor, says the Coppo report.

“In addition to the traditional bricks-and-mortar competitors, from online we now have not only Amazon, but also Kogan,” says the Coppo Report.

“Winning Group (with Appliances Online) also going very well and strengthening its management team.”

Citi Research says the downturn in housing prices will also impact retailers, mostly those who sell furniture and appliances, including Harvey Norman, The Good Guys, Bunnings and Metcash’s hardware business.

“Harvey Norman and The Good Guys are experiencing a slowing housing market combined with elevated pricing competition,” says Citi.

“We forecast negative LFL (like for like) sales growth in both FY19e and FY20e for both retailers due to cyclical and competitive pressure.”

The announcement is a clear threat to JB Hi-Fi and its Good Guys network.

The online retailer has signed supply and logistics agreements which allow it to enter the Australian Whitegoods and Built-In Kitchen Appliance Market with its own range of exclusive brand price-competitive products.

“The Australian Whitegoods and Built-In Kitchen Appliance market lacks competitive tension which has resulted in a limited number of players enjoying inflated margins,” says Kogan.

“One major factor contributing to this lack of competition is the additional complexity and logistical requirements arising from distributing bulky products.

“Due to the rapid growth of the business over the last 12 years, we are now in a position where our logistics and distribution footprint enables us to enter
this market and provide Australians with unprecedented value on a range of the most popular Whitegoods and Built-In Kitchen Appliances like Fridges, Washing Machines, Dryers, Dishwashers, Ovens, Cooktops and Rangehoods.” shares jumped on the news yesterday but this morning were down 10% to $8.61. The company listed on the ASX in 2016 at $1.80.

The company has an expanding portfolio including Kogan Retail, Kogan Marketplace, Kogan Mobile, Kogan Internet, Kogan Insurance, Kogan Health and Kogan Travel. in April added pet and life insurance to this range.

That announcement today follows the launches of Kogan Insurance late last year and Kogan Health in February this year.

In February posted a 45.7% jump in revenue to $209.62 million for the six months to December. Profit was $8.33 million, up 470%.

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