Harvey Norman? Hardly Surprising

Posted on Posted in Retail Marketing, retail strategy

“Harvey Norman takes a big dive”, screamed the headline in the Sydney Morning Herald. But this wasn’t news; it was an entirely predictable announcement. Like-for-like sales down 6.5%. Profit for the year likely to be down 40%.

Harvey’s hurting, and it’s happening because the model doesn’t work anymore. There was a time when “Go Harvey Go” was a rallying cry for customers, and Harvey made sure the message got out there by “winning through weight” of media spend. Back in the day, Harvey Norman’s relatively drab stores, car-salesman service and never-never interest-free deals somehow resonated. But not any more. Gerry’s still selling it, but customers aren’t buying it.

Gerry Harvey will point to a retail spending malaise, lack of GST on overseas online purchases, which has seen some sales leakage (but the high $A and the quality of the online retailers are much more convincing reasons), and most critically the rampant deflation on electronic goods. There is no doubt all these factors play a role but something else is going on here. Y&R Group’s Brand Asset Valuator (BAV) research* clearly shows that retailers like Harvey Norman are being depositioned in the eyes of customers by the new breed of online retailers…and also bricks-and-mortar merchants who choose to constantly refresh and reinvent their offer.

Harvey Norman is standing still, while the landscape shifts from what we at IdeaWorks call “Old Retail” to “New Retail”. I’ve listed some of the changes below in short-hand, but you’ll easily get the drift:

• “Yell & sell” to seduce and engage (guess which side of the ledger Harvey is on?)
• Price obsessed to Value obsessed (our BAV research shows customers understand the true nature of value)
• Retailer in control to Customer in control
• Company focused to Customer focused
• Highly transactional to Highly experiential
• Directional to Interactive
• Distanced to Connected
• Research in store to Research online & mobile
• Single channel to Omni channel

David Jones has equally proved that if you stick doggedly to your original knitting, things can become unraveled (hopefully with DJ’s that’s all about to change). Meanwhile, the best retailers around the world are constantly innovating and experimenting. Best Buy, the US electronics retailer is reconfiguring its stores with prominent “Click & Collect” stations, slimming down its store network with hundreds of smaller shops focused on mobiles, and testing what it calls its “connected store” format. The new store concept is much heavier on tech support, and allows customers armed with smartphones access to a slew of information on products. Best Buy is still struggling in the States, but at least it’s trying to figure out a way forward.

So wouldn’t it be refreshing to see Harvey Norman rethink and reinvent itself in the same way? Go on Harvey, go on.

4 thoughts on “Harvey Norman? Hardly Surprising

  1. I really don’t know about the slimmer cell phone based stores Best Buy is shooting for. There are already tons of cell shops around, what makes theirs better?

  2. The first place Harvey Norman can start is with TVCs. The investment put into running ads during the Olympics was a missed opportunity with such low grade, meaningless ads. They had the chance to do something different and make the most of prime time but again FAIL.

  3. Harvey Norman the worst ever customer service I had ever seen their policy is simply selling the stuff and then forget about it, and if anything goes wrong with the product they simply give you the companies customer service no. of which the product is.
    I will never ever recommend any of my friend or near ones to go to the store.

  4. Gerry spent 20 years taking an anti-innovation, anti-creativity and in many ways anti-customer stance and dragged much of Australian retail down the gurgler with him. It’s hard to feel sorry for him and conversely easy to applaud the startups which respect the customer, add value to their experience and – who’da thunk it – even sometimes grapple with the retailer’s role in a world of over-consumption. I really do think it’s too late to reinvent this most ugly of brands; Gone Harvey, and not missed.

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