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No value at Harvey Norman

January 7, 2011

“They go for you zealously and with hatred all over Twitter”

Gerry Harvey as he publicly retreats from a poorly conceived campaign to have the Australian Government impose GST on all online purchases from offshore sites (reported on 7 January 2010 in Gerry Harvey beats a retreat by Mathew Murphy, The Age). Mr Harvey goes on to say “because of my profile, I then get all these threats and people home in on me … billionaires, greedy, ugly, old, out-of-date, c—s, and the people writing this seem to think we have been ripping them off for years and that we deserve this”.

Hypocrisy of Protection
Of course high profile business leaders can become targets of scorn in social media, or outside of it, they can also attract plaudits, rally support and attract other positive social outcomes. Nowhere in public comment has Mr Harvey suggested that his view is flawed, that the world may have changed, or that there is hypocrisy on wholesale exports arriving in his stores, without the impost of old world tariffs, at the same moment he pressures Government to provide what amounts to retail protectionism. No retailer tariffs, only consumer ones, are apparently the way to save jobs and it always comes to the emotion of fear when logic is missing from the equation.

Nasty Social Media
Mr Harvey is flat out wrong, and that is why media (whether emerging social media or longer-standing press) are taking him to task. It is true that Social Media can be acerbic, I wrote
‘Twitter is Bitter’ during last year’s Australian Federal Election on the extremes of social media coverage. Nevertheless, public sentiment is what it is, it comes with extremes and it is unfiltered, this makes it valuable, if at times unsavory. You can learn from it if you listen (maybe Gerry Harvey isn’t listening), or you can engage and make a case for your cause and change opinion, or you can put your head in the sand and call those connected through Social Media “these people, whoever they might be” – Gerry Harvey’s words. Of course Harvey Norman is on Twitter “for the hottest products”, just not weighing into their mogul’s lobbying. I guess “those people”, some 4,941 Twitter account followers are OK if they might buy something?

Avoiding the rhetoric and looking at why Gerry Harvey would enter this debate, has made me ask a simple question – what fundamental VALUE does Harvey Norman provide?

Value of Harvey Norman
As far as I know, they don’t make anything. Sure, they can give you advice, if a disinterested and largely uniformed sales person is to be considered valuable advice, and you can’t use Google? Correct me if I am wrong, but the main ‘value’ is aggregating product, putting it where you can get it (close geographically and available immediately) and helping you finance stuff you can’t afford (not sure if that is value to you or them?). Perhaps somewhere to return faulty items may have some inherent value as is seeing lots of stuff all at once. Anyone got anything else? Seems to me that this is useful but hardly unique or worthy of anything more than a modest premium. Of course there is collective buying power, but that should be the argument for cheaper prices not higher ones.

Online Versus Physical Store
So if a consumer can go online, purchase a product and get it for significantly cheaper than Harvey Norman, then there is an innate set of problems. Firstly, if Harvey Norman has buying clout, the consumer is not the beneficiary. Secondly, maybe being available immediately, located nearby and presented in a ‘quasi-serviced’ environment doesn’t have the value and cache to justify significant price differentials. Of course there is also the billionaire patriarch (is that $500 margin from every man, women and child in Australia) or am I just “one of these people” on Twitter that is “vicious and hateful”. Personally, I think I’m fair minded, but I’ll listen to the online community tell me otherwise.

Perhaps to protect margin in a marginal value-adding operation, you need Government protection, unspoken price collusion and an effective oligopoly. The price savings online provide prima facie support to such an assumption. It will be hard for Gerry Harvey and others to sustain such an oligopoly in a market that is globalized at the consumer access level. Perhaps that is what is most disturbing to Retail Dinosaurs (borrowing a nasty phrase from Twitter) about online trends and social media – you just can’t get a monopoly from geography alone anymore and the Government isn’t always going to hand out Plasma TV stimulus payments.

Of course if you are up for a more aggressive interpretation, you can read the view of ‘Things Bogans Like’ in #202 – Gerry Harvey, very funny piece, unless you’re a Bogan (or Gerry Harvey).

Agree, disagree, I would like to know you’re view and online retail versus domestic store experiences.

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2 Comments leave one →
  1. Dominic Miller permalink
    January 7, 2011 3:52 PM

    Agree. C’mon Gerry, nobody cares what you think except your shareholders and I suspect that they are beginning to care less and less with the number of errors of good PR judgement that you seem to be making. First taking the Kogan bait (are you sure you don’t actually won Kogan because the press they got from your attack on them was gold) and now this. Step away from the vehicle Gerry. Quietly. Shhhhhh. There-there…

  2. January 7, 2011 7:35 PM

    I was in a wine store in Carlton, Melbourne just the other day & talking to the owner, not even sure how the subject of the retail kerfuffle came up, but his comment was – “Retail in Australia has had it far too good for far too long making oodles of cash on things that should plain just not cost this much”. And that to me, appears to be the crux of the matter – as I learned as an economics graduate, when any business in a capitalist, market based system achieves a monopoly or close to it and is raking in excess profits, then competitors will certainly move in. Australia’s (and New Zealand’s too) isolation of olden times has let these guys make a killing and the competitors (or smarter punter) are moving in (punters moving out) via the internet. A letter to the editor on The Age today pointed to the fact in some cases it is not the retailer, but the wholesaler who is raping the retailer & thus customer. But in the case of Harvey Norman, I find it hard to believe that they would be using any wholesalers to any serious level, mostly sourcing it themselves direct from suppliers in Asia so they are creaming it.

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