Now that Harvey Norman is expecting a fall of as much as a 39 per cent in full year pre-tax profits, the question of how long the company manages to defer the eulogy 'Gone, Harvey Norman Gone', is anyone’s guess. It is certain is that the iconic Australian retailer needs to make dramatic changes if it’s to stand up to the rigours of competition from more nimble online players, with their vastly more attractive pricing and broader product ranges.
But with Myer chief executive Bernie Brookes predicting local department stores will be Australia's most popular online retail sites within three to five years, Harvey Norman looks set to face increased competition not just from websites, but from traditional retailers too. It’s time for Gerry Harvey to reinvent the business.
But it’s not just a matter of throwing open the doors to a website. It's not about retail versus e-tail. It’s about providing consumers with a seamless experience online and off. Smart companies are integrating their offline channels with their website and mobile channels to reflect the fact that customers don’t see the physical stores as a separate channel to the online sites. In fully embracing a multichannel strategy, Harvey Norman will need to adopt an appetite for self-cannibalisation and start analysing what’s selling online versus offline in order to maximise market share.
For physical stores to remain relevant and provide the main point of contact with customers, then they have to be so much more than a place to acquire merchandise. Look at the standout success of Apple stores across the globe. They re-imagined everything and reworked the concept of try before you buy to provide value.
In looking at customer behaviour, there are huge opportunities to better integrate offline and online channels. Depending on the particular product, consumers may choose do research online yet still want to buy in the bricks and mortar store. On the other hand, some may be at the local shopping mall and see a product in a store yet decide to delay the purchase while they search for better prices online. Others still may use their smartphone while in store to do quick fire price comparisons.
First brand touch point will be mobile
Indeed, we’re already very close to the point where more people access the internet via a smartphone rather than a desktop. Smartphones and tablet devices have changed our lives permanently. At some time very soon, mobile will be a consumer’s first touch point with a brand. But this does not mean it will necessarily be the last.
Compelling customers to translate online behaviour to a trip to your local store to get their hands on the item in question right here, right now should not be underestimated. Savvy retailers will make multiple channels work as one.
For instance, some retailers are offering ‘Click and Collect’ services allowing customers to nominate their preferred store to collect the order. So online purchases actually drive the customer into a store where further offers can be made. At Apple Stores, the value proposition is delivered via the ability to test-drive any product loaded with the applications that take your interest, and have someone to show you how to use it.
Harvey Norman's expected profit slump portends of the retail shake-up ahead, not just in their business but in the retail industry as a whole. It is very much the time to act and respond to these behavioural changes. There are big opportunities and rewards to be gained in the dynamic online retail environment. Clearly success requires a very different formula from what has worked in the past. The traditional way of doing business with those deliciously fat margins of old is being consigned to the history books.
Of course, it’s not just Gerry Harvey and retail chief executives that must become strategic in the internet space. Virtually every business needs to reimagine its business model, products and services.
Simon van Wyk is the founder of digital agency HotHouse.
Reimagining the Harvey Norman experience
As Australian companies are belatedly learning, putting the 'e' in retail is no longer an option, it's a necessity. And there are ways online channels can coexist and even complement in-store sales.
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