Gerry Harvey's missing online link

The Harvey Norman boss may have 'got it' in the 60s but the retail game has moved on and his reluctance to adapt with the times is bad news for his business.

Gerry Harvey may 'got it' in 1960, but the retail environment has changed and unfortunately his reluctance to adapt with the times has severely jeopardised his business.

Reading his latest comments made me realise that how often people who are good in their chosen field can lose touch. The retail game isn't  just about the survival of the fittest but its about who is able to adapt and innovate the fastest.

That's push is even fiercer in the online retail space and CatchOfTheDay is one example where adaptability and innovation have delivered results. We are a company that started from the garage just six years ago and are now leading the market and the sectors that Harvey Norman is playing in.

Why? Because we have built our business model to harness the best the internet delivers, which has allowed us to cut out the middle man and bring our products to the market quickly, efficiently and at low cost.

I have to say Harvey does make a few good points, especially the one about making online sales figures public.

Very few companies in the market reveal their online figures, Harvey Norman does and so do we and we are happy to do it. Putting figures out in the open actually puts a company in a different league and usually tells people how good and strong you are.

Customer perception can play a key role in today’s tough retail environment and it is quite bemusing to see Harvey painting such a grim picture of his online businesses. It's not the best way to get customers on your side.   

For Harvey to say that daily deal sites are struggling just shows his lack of understanding of the sector. While Harvey claims sales of $50,000 a week, we are selling about $5 million a week.

Making money in the deals space, which by the way is still growing, is not always easy but you can still make a profit if you can come up with exciting offerings. Deal players who are in tune with today's thrifty and time poor shopper are the ones that will remain profitable, no matter what happens to the overall sector.

This is something Harvey is yet to learn and the thing is that he has built his business on the principles of successful property investment and leasing.

Harvey makes somewhere around 15 per cent on any product that his franchisees are buying and in a tough market there is no room for a middleman. The fees he charges his franchisees are huge, and that is before they put their excessive margins on top.

It’s no surprise to hear consumers say that Harvey Norman is a very expensive place and I think the main problem is this franchise system that worked well in the past  for Harvey but is losing its relevance today.

Success in the retail space today is all about speed and that's were traditional retailers are lagging behind, while they take months to make a decision, we are already out there in the market with the proiduct. 

I listened to what a number of them had to say at the Retail Leaders Forum in Sydney this week and frankly, a lot of them have a major challenge on their hands because it’s just not that easy to build something that can compete with the likes of us.

The decisions are made very slowly and lot of them are struggling to hire the right people. They also rely far too much on external third party analysts and logistics.

The bottom line is that they just aren’t moving fast enough. There is no place for dinosaurs in today's economy. Retailers need to be agile, responsive and above all embrace innovation. They will probably get there but it will take them a couple of years and by that time we will be in a completely different space. 

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles