By Shivaun Hales

JB Hi-Fi is feeling the pressure of strong online competition, forcing the retailer to slash prices in order to keep up.

JB Hi-Fi chief executive Terry Smart said retailers are having to change existing strategies to accommodate savvy consumers shopping for the best deals online.

“People are using the site to browse and research before they come into stores,” Smart told The Australian Financial Review.

“Now what they’re doing is not just using it to understand prices locally, but globally. To operate in a global market does give us some challenges of pricing in a few categories,” he said.

JB Hi-Fi’s online store recorded a sales increase of 85% in December compared to the same time a year ago, and the number of unique web visitors jumped from an average of 800,000 to 1.4 million per week in December.

Morgan Stanley analyst Thomas Kierath expects JB Hi-Fi’s online sales would grow to $200 million, or 5% of the company’s total, by 2015.

JB Hi-Fi’s current multichannel strategy gives consumers the option of paying for items online and collecting it from a retail store.

“The multichannel strategy is a necessary one and if you want to be capturing areas where effectively most of market retail sales growth is coming from at the moment, you need to have a strong online platform,” said Nomura analyst Nick Berry.

Berry said JB Hi-Fi’s online strategy, which he estimates to be worth about $9.9 million, is working well.

Despite flat consumer spending across the retail industry, JB Hi-Fi is planning to open 16 new stores this year.