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JB HI FI Dump Yamaha In Row Over Musical Instruments

By David Richards | Tuesday | 28/05/2013

EXCLUSIVE: A major row has broken out between Yamaha and JB HI FI with the Japanese music Company telling their dealer network that their audio products will not be sold at the mass retailer despite an increase in Yamaha AV sales last year.

ChannelNews understands that it was JB HI Fi not Yamaha who dumped the Japanese brand after management from Yamaha's music division refused to supply certain musical products to the mass retailer after initially agreeing to trade with JB Hi Fi.

A senior JB Hi Fi board member told ChannelNews that Yamaha "reneged" on an agreement that would have seen JB Hi Fi retail and JB Hi Fi Commercial sell musical instruments with the retailer's commercial division set to range musical products for schools, education departments and commercial music organisations. 

The flare up between the two companies happened shortly after the collapse of the Australian Music Group ("AMG"), who traded as Allan's Billy Hyde. The group had revenues of annual turnover in excess of $120 million. With 20 stores and four franchisee stores, the group who sold millions of dollars worth of Yamaha instruments, represented approximately 25% of the Australian retail market for musical instruments.

At the time of the collapse JB Hi Fi moved to employ several experienced Billy Hyde staff, they also took over the music retailer's education supply division.

A dealer letter sent out by Mark Amory, General Manager - Music Products Division, at Yamaha Music Australia claims that it was Yamaha who dumped JB Hi Fi and not the other way round.

CN has been told that JB Hi Fi was led to believe that they would have access to the entire Yamaha music range but when it came to ordering stock they were refused access to several key musical instruments in the range with Yamaha insisting the they sell sub $100 products alongside Costco.

In a letter distributed by Amory to retail partners he claims that Yamaha has moved to differentiate the products sold by mass retailers vs. the specialist music channel and that Yamaha needs business partners that" follow their philosophy and understand the Yamaha "brand value and vision".

He claims companies such as Big Buys, Toys R Us and Costco will continue to stock Yamaha music products.

"We have ceased trading with JB Hi Fi, and we will no longer be supplying the stores with our products, effective immediately," he writes.

He then claims that the move to deny JB Hi Fi was being because Yamaha Music was taking a "new approach" to address the current decline in music products in Australia". 

He claims that he wants to "expose more people to music products while providing them with a quality product option in the mass market channel". 

He makes no mention of why he believes JB Hi Fi, who is the biggest seller of music in Australia, is not able to deliver on his objectives. 

Amory claims that any product that sells for less than $100 RPP will be offered to both mass market and specialist channels.

Products over $100 RRP will be differentiated in each channel.

 "This means that products will not be sold simultaneously in both channels," he writes

.

JB Hi Fi who have had a lot of success selling premium headphones, smartphones, Apple products and $2,500 Sonos music systems believe that  they are in a unique position to grow their share of the musical instrument market.

Terry Smart, the CEO of JB Hi Fi, told ChannelNews that his company negotiated in "good faith" with Yamaha and that their decision to not supply JB Hi Fi "did not make sense, we are now working with several other musical instrument suppliers with a lot of success, CASIO who make musical keyboards is just one musical instrument company that is benefiting from the JB Hi Fi relationship," he said.

ChannelNews understands that Yamaha are currently setting up to sell music instruments direct in Australia and that this could have contributed to their decision to not partner with the mass retailer. 

A victim of the split has been the Yamaha AV Division whose products have been removed from JB Hi Fi stores. 

Sources have told ChannelNews that executives in Yamaha's AV division are furious.

Smart said "It is a pity that we are not selling Yamaha products anymore we had a great relationship with their AV division but unfortunately they have become a victim of the fall out".

Currently JB Hi Fi is looking to expand their Hi Fi product range with brands like Denon, Marantz, NAD and Boston set to be considered as a replacement for the Yamaha brand.

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