Why Big Brands Are Ditching Retailers and Going Direct – And What It Means for You

Retailers Under Pressure as Big Brands Go Direct

Australia’s consumer electronics and appliance retailers are facing mounting pressure as major brands ramp up their direct-to-consumer (DTC) strategies—opening new branded stores and boosting online sales through aggressive marketing campaigns, particularly during peak sales events like Black Friday.

LG has been among the most transparent about its direct-sell ambitions, while Samsung continues to grow its footprint, now operating 12 retail stores across Australia. This week, Tefal—part of the French appliance powerhouse Groupe SEB—opened its first Australian retail store at Sydney’s Macquarie Centre, offering shoppers a destination to explore the brand’s full range of cookware, kitchenware, and appliances.

Sony has also long pursued the direct sales model, though its brick-and-mortar strategy has evolved, with the company previously closing several standalone outlets after trial periods.

In the premium appliance segment, Miele continues to invest in direct stores, even as it manages declining demand amid increased competition from newer luxury appliance brands targeting the same affluent customer base.

Retailers Feeling the Squeeze

The shift raises a critical question for the wider retail sector: Are brands pulling away because of high costs of doing business with Australian retailers, limited in-store space to showcase products, or a shortfall in staff product knowledge?

Unlike general retailers, brand-owned stores can offer deeper product education and tailored experiences through fully trained consultants—a factor that’s increasingly influencing consumer purchasing decisions.

Adding to the competitive pressure is the rise of international discount and warehouse chains. Costco and Aldi are expanding their electronics and appliance offerings—categories traditionally dominated by JB Hi-Fi, The Good Guys, Bing Lee, and Harvey Norman.

Combined, these two foreign giants are now diverting an estimated $17.5 billion in annual sales away from traditional Australian retailers, including Woolworths, Big W, Officeworks, and Bunnings.

Industry Shake-ups and Leadership Changes

The market disruption is contributing to internal turbulence across the retail sector. Officeworks, once a strong performer, recently underwent a major restructure under a new CEO, with long-serving buyers and merchandisers exiting the business as leadership looks to overhaul operations.

Meanwhile, JB Hi-Fi Group—which includes The Good Guys and e&s Trading—has seen the departure of Group CEO Terry Smart, replaced by former CFO Nick Wells. Smart told ChannelNews shortly before stepping down that the expansion of brand-owned stores could be seen “as a way for brands to educate consumers,” though others in the sector are less diplomatic, calling it a challenge that “retailers must address in partnership with brands.”

One major retailer was more blunt, claiming, “The move by brands to sell direct will see retailers move to doing more business with distributors they can trust.” He added, “A distributor needs us and we need them to support us.”

Why Brands Are Going Direct

According to several leading manufacturers, the DTC model allows them to:

• Control the brand experience from discovery to purchase, ensuring consistency and better customer engagement.
• Increase profitability by cutting out intermediaries and capturing a greater share of the retail margin.
• Build direct customer relationships, gaining valuable data and insights to inform marketing and product development.
• Leverage digital transformation, using e-commerce, social media, and targeted campaigns to reach consumers more efficiently.

However, this transition isn’t without hurdles. Brands operating in Australia still face logistics and supply chain challenges, compounded by international trade tensions and U.S. tariff policies. Chinese manufacturers such as Xiaomi are responding by establishing local subsidiaries to streamline distribution and reduce exposure to import complexities.

The Costco Factor

Warehouse giant Costco, now operating 15 stores nationwide, continues to signal major ambitions in the appliance and consumer electronics categories. Executives at the company claim its competitive pricing, bulk model, and expanding product mix have already delivered “strong success” in markets traditionally dominated by mainstream retailers.