Consumer electronics giant JB Hi-Fi has revealed it is in preliminary discussions with The Good Guys over the home appliance chain's proposed sale.In a statement to the ASX, JB Hi-Fi said the discussions were "preliminary and exploratory in nature" at this stage. The Good Guys acquisition will boost JB Hi-Fi's sales by $2 billion a year. "JB Hi-Fi has made no decision and nor has it entered into any agreement with respect to the acquisition of The Good Guys," it said. The listed retailer's statement comes after The Australian Financial Review's Street Talk column reported JB Hi-Fi had made an indicative offer for the 100-store Good Guys network. JB Hi-Fi earnings could fall by as much as 23%, Citi predicts. JB Hi-Fi appears to have edged in front of Steinhoff International, owner of Freedom Furniture, as the leading potential trade buyer for The Good Guys, the AFR reported. Taking over The Good Guys would fit with JB Hi-Fi's strategy of moving heavily into the home appliances market.

The company has previously announced plans to open 58 JB Hi-Fi Home stores, which are larger and stock appliances like vacuum cleaners and washing machines, by the end of this year and have 75 stores by the end of 2017. Taking over The Good Guys would boost JB's footprint to almost 300 stores Australia-wide. JB Hi-Fi is focusing on growing its Home stores. However, JB Hi-Fi will be competing with private equity bidders, including Bain Capital, for The Good Guys, while a stock market float also remains on the cards.  The Good Guys chairman Andrew Muir told Fairfax Media last month that an initial public offering was "the next logical step in the evolution and growth of The Good Guys," and was preparing to invite investment banks to pitch for a role in the float. The Good Guys has been buying back joint-venture stores in recent years in preparation for either a sale or a stock market float. The company has annual sales of $2 billion and estimated earnings before interest, tax, depreciation and amortisation of about $110 million, suggesting it could have an enterprise value including debt of between $800 million and $900 million. 

The Good Guys claims it is Australia's biggest whitegoods and home appliance retailer and runs second or third in home entertainment behind JB Hi-Fi and Harvey Norman.JB Hi-Fi has been contacted for comment. Inspired design, lasting quality & superior service Miele is made to last and be forever better. Miele offer a range of freestanding, built-in, integrated and fully integrated dishwashers to fit harmoniously in your home. Cooking & Dishwashers (29) Vacuums & Cleaners (14)hello kitty vacuum cleaner toy Miele Vacuum Cleaners - There’s no escape for dust, bacteria, allergens and mould spores with the superior Miele vacuum cleaner seal. rainbow vacuum cleaner feedback Miele Dishwashers - No more hand washing wine glasses! karcher vacuum cleaner motor

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However, if JB Hi-Fi is prepared to put a decent financial offer on the table, it would have to be the most likely contender.Quite frankly it is hard to imagine mum and dad investors stampeding their brokers to get a slice of The Good Guys.  Many are still deeply wounded from their experience in the Dick Smith IPO. Only over the past few weeks the last of the Dick Smith stores closed down. Those who had shares torched all their money, and two banks lost tens of millions of dollars.The private equity players that sold Dick Smith into the IPO rode away with all the money – making hundreds of millions on the deal. Private equity could easily buy The Good Guys. But private equity needs an exit plan and without the viable option of an IPO, there isn't  one. It would be a gutsy call.Remember it wasn't that many years ago that small shareholders piled into the Myer float – another big consumer brand that small shareholders (erroneously) trusted to grow profits. It now trades at around $1.20 – a fraction of its $4.10 listing price.

The retail industry has been buffeted and disrupted, and remains both structurally challenged and hostage to consumer sentiment.In electronics and appliances alone, over the past 10 or so years there have been a large number of business casualties including Retrovision, Billy Guyatts, Brashes and Vox (which was acquired by Harvey Norman).Harvey Norman chairman Gerry Harvey reckons there is only room for a few in the market – and if The Good Guys is absorbed into JB Hi-Fi, that will be about all that's left of those with bricks and mortar chains.Having had its interest in The Good Guys outed by the media, JB Hi-Fi was on Thursday forced to confirm the takeover talks.Given the obstacles faced by rival contenders for The Good Guys, one would have to think it had the inside running.Certainly JB Hi-Fi could extract better value out of buying its rival than others. It could get rid of overlapping costs like staff and IT, and rationalise the property outlets.And the move would also bolster JB Hi-Fi's ambitions to move further into bigger and different electrical appliances like washing machines and vacuum cleaners.

Indeed JB Hi-Fi has adapted better than most to disruption driven chances in products – most particularly from the demise of what was once its mainstay business of selling DVDs and CDs.JB Hi-Fi boss Richard Murray insists it's early days in the negotiations, and there are no guarantees that anything will come of the preliminary talks that have been held.But in some respects the leak has been useful for Murray as a test of how his shareholders see the prospects of such a deal.With JB Hi-Fi's share price rising as much as 4 per cent, it was reasonably positive.A further move into whitegoods carries plenty of risk for JB Hi-Fi and Murray will need to be very careful about where to pitch any offer. The company said on Thursday that it evaluates all possible opportunities against a range of factors and would only pursue an acquisition if it made compelling financial sense for all shareholders. Move over e-commerce and make way for v-commerce.​There was much fanfare around the eBay/Myer decision to make Australians the guinea pigs for the launch of virtual shopping.

It's a bit gimmicky and everyone wants a turn of trying on the slightly dinky "shopticals" cardboard glasses, which after loading an app on your smart phone, takes you on a shopping tour of – in this case – Myer.There is no doubt that the concept of getting a more real and three-dimensional experience of products  will create a new channel to market.Using the focus of the eye to navigate around the site won't suit everyone so the experience needs to be more refined before it gains broad appeal.But as sophisticated as new technology becomes, the bottom line for retailers is the product rather than the delivery and it's all about sales.For Myer the question that needs answering is whether this new mode of shopping increase sales or will it cannibalise the old-fashioned ecommerce or the even more traditional option of actually going to a store.The trouble for stores using ecommerce is two-fold. The first is that conversion rates (those that look relative to buy)  remain low – around 2 to 4 per cent relative to those who shop in a physical store, which are in the range of 20 to 40 per cent.