Wesfarmers To Buy The Good Guys A Major Threat For Harvey Norman

Three operators of The Good Guys stores have confirmed to ChannelNews that Wesfarmers is set to buy the Melbourne based Company and that an ASX announcement is imminent.

The chain which is privately owned by the Muir family has had a “for sale” sign up on the business for more than 12 months.

Analysts claim that if the information is accurate and the move could have a major impact on Harvey Norman due to Wesfarmers having “superior” distribution and management systems.

Currently Harvey Norman is in the processes of implementing a multimillion dollar SAP rollout in an effort to improve distribution and sales via their franchised store operation. Wesfarmers who already own Officeworks, Coles, K Mart and Target is believed to be considering the relocation of several The Good Guys Stores, right next to their highly successful Bunnings hardware operation.

The announcement that will be made to the stock exchange tomorrow morning could change the landscape for appliance and consumer electronics retailing in Australia as Wesfarmers go head to head with Woolworths’ new Masters Retail chain, which is set to sell appliances and consumer electronics goods alongside hardware and building materials.

Several appliance and home electronics vendors including Samsung, LG and Panasonic have confirmed the rumour with all three appliance vendors set to hold supplier meetings with Wesfarmers this week.

Background

The privately owned retailer, set up in Victoria in 1952 and now said to be subject to a takeover by Westfarmers, is privately owned by the Muir family based in Melbourne. 

Muir Investments, which controls the operation, is owned by Andrew Muir, his mother Joan and sister Carolyne.

Currently it has 97 stores in both Australia and New Zealand, selling everything from DVDs, TVs and set top boxes to kitchen appliances.

Its largest store presence is in NSW, although its retail prowess extends across every Australian state (bar Tasmania) and also has an online store and extensive product catalogues. 

Good Guys prides itself on the personal touch with cheerful, smiley ad campaigns, we’re here to help’ customer service approach and ‘Pay Less Pay Cash’ slogans.

In 2009, the appliance seller was rumoured to be involved in a takeover by Westfarmers chief rival Woolworths after being rejected by JB Hi Fi.

The deal, if it goes ahead, will put the retailer at a massive advantage over leading rival Harvey Norman, who has 166 stores, considering the marketing, economies of scale and distribution networks it would have at its disposal.

The normally private company, who refuses to disclose profit figures, hired KPMG auditors two years ago to review growth prospects with a view to either selling the company or attract additional investors, and was said to be toying with the notion of buying troubled retailer Clive Peters.

In March of this year, the Blackstone Group investors were said to be close to buying them for a reported $1 billion dollars, although this failed to come to pass

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