An open letter to Mr Gerry Harvey

Dear Mr Harvey,

Can I call you Gerry? I think I will. As what I have to say to you is said as a friend to a friend, even though we aren’t actually friends, but you know what I mean…

Firstly , I understand. I understand that this is a very important battle that you are undertaking and that the retailing businesses in Australia, small and large would benefit from you winning the case, if the problem actually existed.

I am concerned that you have underestimated the intelligence of the people online in Australia and have tried to give us a ‘War of the World’s’ type of entertainment about how everyone in Australia is buying online cheap, and how that will make your stores suffer. IMHO (In my humble opinion, I know you might not have known what that meant, see we speak like that sometimes online… LOL!) it is not anywhere near as bad as you seem to believe or are trying to make out that it is.

If anyone is going to buy a TV online, it would be me, I am online approx 80% of my day every day. However, just last weekend, I bought a TV from a retail store. I was shopping on price, but I also wanted convenience, I had my 6 year old son with me and I needed it quick, in the back of the car and I wanted to go home.

I am sorry to say I did not go to a Harvey Norman store, my perception was that it would be too expensive, and parking at Penrith is a drama (but I know you already helped us with that one, so thanks). I bought a generic brand from a local retailer cheaper than that nasty Mr Kogan could do, and I was able to pick it up up that day and plug it in to put a smile on my sons face.

Now I will say at this point that I am not an expert in retailing, unless you are talking about retailing online, which I do quite a lot of, helping other Australian companies make the switch and include online in their mix, which is what I am proposing right now.

See I think people may have misjudged you, but that is not entirely their fault. Whilst it is true that retailing is an important part of your business, my understanding, and correct me if I am wrong, is that you are in the business of franchising, giving people locations/opportunities to sell goods. So your customer is not me, but it is the franchisee at Penrith. He put down his cold hard cash to be part of the Harvey Norman brand, seen as one of the strongest in Australian Retailing because it would draw customers into the store where he could sell TV’s and make money.

Now I am not aware of exactly how your franchise works, but I am pretty sure that if you just started selling online as everyone is suggesting you do, then Mr Franchisee would get pretty upset. He would see that as you taking HIS customer, almost double dipping, which we all know is not cool. That’s why it is easy for woolworths to sell online, because they always sell direct to the consumer, but for you not so easy. As I said earlier, I understand. It is the same reason no major brands sell direct to the public, imagine if they did, how upset would everyone be then.

But I am excited for you, because you are Gerry Harvey. You can lead a game changing way of embracing the internet and making it work for large retailers. Don’t just think it is about price, because it’s not. For me shopping online is getting things I can’t find anywhere else, price rarely comes into it.

There is an old business saying that says:

You can choose any 2 from the following list

• Good
• Cheap
• Fast

So if it’s Good & cheap, it won’t be fast.

If it’s Cheap & Fast, it won’t be good.

And if it’s Fast and good, then it is not going to be cheap.

Online retailers have always thought it was about being Cheap. But sometimes it is FAST! Luckily for you, most of the online retailers that are having a go at you are focusing on cheap, but being cheap is never a good position to be, because then you get the price shoppers who are always one discount away from being the customer of someone else.

So here is my magic 5 step online business mode to save Harvey Norman without upsetting the franchisees…

1. Setup an online store of stock available from Harvey Norman stores
2. Let consumers buy their product online with a saving because now we don’t have to get a slaesman involved etc, but make it a small saving, don’t worry about being the cheapest. People just like to think they are getting a bargain.
3. Given you already have a distribution network (a plus) all over Australia offer FREE delivery. Let the transaction still happen via the closest store so the franchisee gets his slice, and he delivers it.
4. Value add for the customer and the franchisee, offer a service for Installation and training for a small amount. And take the box away for them (biggest headache ever for me!)

Happy customer bought online, for a small discount (probably nothing more than they could have negotiated instore) had their new TV setup, for a small fee by the nice man, who also took the box away.

Sure it has some holes and probably needs some number crunching in a few areas, but it shows that being the cheapest online is not always where the battle is, be the BEST! Because then there is no price competition.

Changing the laws on imports etc would be one way to battle the perceived problem , but that’s not what it’s about Mr Harvey, there is always a better way.

Your Friend

Rich Evans