Thursday, January 6, 2011

Gerry Harvey remains defiantly self-righteous...big mistake!

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That was our shortest protest action against tax charges. Harvey Norman has backed down from proposed tax lobbying for a GST on imported goods. He said he is hurt by the criticism. Well, I wonder if that was his pride. He says his message was 'poorly communicated'....in fact it was 'poorly conceived'. He showed himself to be a shallow, pragmatic thinker. He of course does not have a monopoly on this. Sadly, most business people these days are shallow, pragmatic thinkers. No doubt he will console himself with some takeover, and ever reflect on why he stuffed up with his lobbying scheme. He argues that the campaign was 'bad timing'. No Gerry, there is no good timing for a bad idea. But such is the philosophy of pragmatism that an exponent of some idea would argue that a good idea tomorrow is not a good idea today. I don't preclude that timing can be a factor (i.e. pertinent context), but exactly what have made his timing better. It was a matter of diminished intellect. He ought to have argued against taxation, and focused upon the unfairness of ALL TAXATION....in as much as it is all imposed, its all extortion, and it serves no one...not the poor, not politicians. Its an entirely false economy perpetuated by shallow-minded people.
By all means, prove me wrong. Harvey did not take the criticism well. He said in the SMH:
'The rise of social media had made people like him more prone to personal abuse. ''You might have got a nasty phone call or a letter back in the old days but now anything slightly controversial, these people, whoever they might be, they go for you zealously and with hatred all over Twitter,'' he said. ''If you are a CEO of a company and you speak out and then the board gets involved … it is suicidal'.
The fact is that politics impacts people's life. This is personal. Taxation is coercion, so anyone who lobbies for change risks changing a balance. There is only one justifiable change - the repel of tax, not its 'adjustment' or 'addition'. If his ego is hurt, tough, he should understand that he has the greater power to hurt people's lives. A responsibility such as his demands a higher level of thinking. His subordinates and his own judgement have failed him here. There is no hatred on my part for his efforts. On some level I respect business people to the extent that they exude a sense of purpose, conceptual skills, respect the rights of others (i.e. empathy), exhibit an efficacy in business, and develop effective business systems.
The extent to which they court government favours, lobby for tax 'adjustments' rather than repels, and do not display the conviction to support freedom, but rather to befriend extortionate government ministers, is the extent to which I think them 'shallow' people who lack depth and humanity. On that basis I say to Gerry Harvey 'Get a real education', we have had a practical product (Industrial) revolution, join the 'revolution of ideas' which will eventually sweep away current contemporary values.
''Because of my profile, I then get all these threats and people home in on me. It becomes me, Gerry Harvey and Solomon Lew - 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,'' he said. ''I think to myself, 'you don't want to get up every day and live this life'.
I would never criticise a person for being greedy...socialist nonsense. He did however fail to adapt to the current market trends, as he is holding onto high cost showrooms which will quickly lose market share because its high margin shopping compared to low-margin, online shopping. So he can play the victim, but really he should have seen this happen. We don't have to worry about him growing broken though, he can convert his stores into apartments I guess. I trust he owns the stores. Poor guy if not....he is about to lose a lot of money. Hope he escapes with spare change. Insofar as he is accused of ripping people off, the reality is that his stores were always advertising and 'product variety' driven. I think he probably was never very effective in business because he probably always struggled with high staff turnover and low efficiency. Hence, the high margins. I always respects the far better prices I got from Bing Lee for white goods. The reality is that product pricing comparisons with overseas show a huge discrepancy, so let him account for that. He has not. He just laments the criticism of him. The reality is people expect competitive pricing, and they feel they are extortionists because in some sense, they know and understand there is an absence of competition in Australia and NZ.
''When people criticise you like that, it makes you think, 'do I really want to do this? No, I don't'. I have got so much heat that I think I have to sit back now".
Nonsense. This is a time for him to reflect on the more reasonable criticism of him. Not to do a dummy spit and evade the issue. Learn!
Mr Harvey said the gripe of the retailing coalition was not about ''online retail versus bricks and mortar'' but rather about closing a tax loophole that did not support Australian jobs or the local economy. ''What we are talking about is someone buying a guitar in New York, for instance, and having it sent over here 30 per cent cheaper. It is giving that overseas retailer the advantage. It makes you think, 'I am paying all the bills, creating jobs, and this guy is getting the sale and doesn't contribute anything to our society'.''
He argues pragmatically that it is about a tax loophole. The problem with this is that his campaign merely closes one loophole so the government can open another. He needs to appreciate why there are loopholes, and lobby to change the system. The way he structured the issue - it is an issue of online vs 'the majors' because he sponsored the issue. It is not about jobs. If Australia has to lose some jobs, so be it. They were marginal, low value jobs which should have disappeared years ago if he was smarter. The economy will always create more jobs. The unemployment rate is not exactly high. He rationalises that this guy offshore does not create jobs for Australia. Who cares if he creates jobs or not. Employment is not the customers responsibility...and its only his because he is over-exposed to the high-margin, traditional, model of retailing. They are cheaper, not by the 10% GST, not by 30% as he suggests, but more like 70-80% because he is not competitive in his warehousing, distribution, retailing operations.
He agrees it was "poor judgment to launch the campaign in the post-Christmas sales period".
I disagree with this. It was poor judgement in any seasonal context. The issue is tax imposition, though certainly recession and Xmas might elevate sensitivities. But that was not the basis for criticism, so let's not build straw men.
"Mr Harvey said the launch of his own online store in the 1990s had been another example of bad timing. ''When I opened my site, I was doing $30,000 a week turnover, so I closed it and I opened it up again … I got the same turnover so I closed it again. Now I am opening another one as we speak because in this business it is as much about timing as anything else".
What nonsense. Plenty of others opened online stores and have done very well in the 1990s and 2000s. The problem was not his timing, it was his business model. He wanted to retain his high profit margins, so he was not relevant commercially when he opened, so he was forced to close. If he cut margins online, people would just buy online. Clearly he needed to offer some justification for people to buy in-store, and he can't at his profit margins. The reality is that it might have been difficult to integrate online and showroom based stores. The reality is that his high-margin model is not sustainable. He will be left selling to the elderly who cannot use a computer, and need the unit installed.
One of the commentators on this story made the point:
"The missing link in this argument is suppliers of branded goods. They are just as responsible for setting the prices we pay in Australia. Why are brands like Bose so much more expensive in Australia than anywhere else? Because the suppliers charge cost prices that are more expensive than retail prices overseas! Where the public wants the brand (eg Apple, Bose) the retailers either have to pay the cost or the supplier won't sell to them!!"
I actually agree that this was a factor in the old days when Sony were supplying product from Japan, and they marked up the price margin on new products because Australia was not a strategic market, and given their limited supply capacity. These companies wanted to be leaders in the USA and Japan, as they were the leading markets. That is no longer true. Today, the Chinese just indiscriminately dump product on the market, and this has allowed middlemen to cut into Gerry's margins. The implication was that Gerry was a lazy retailer, living off the easy sales. This is why I say he did not understand the market changed. In a few foul swoops, he has desecrated his repudiation. His first mistake was his comment that poor people never learn; that they are defined by their early years. i.e. Once a bum, always a bum. A lot of people will never forget that. He seems to think he is a revolutionary. He sells products for Christs sake, and employs idiots to do his planning, now to his detriment. I personally have little interest in selling stuff. I do it because I have to live. But its so incidental. This guy has no respect for ideas. Well, he will be defeated by his ignorance and self-righteousness.

It is amazing that the salesman who one market share with his 'in-your-face' promotions will go down in flames because of poor publicity. I guess salespeople are famous for having a pretense of an ego. His role as a CEO has allowed him to lose his old touch. He might not have made that mistake years ago....he was probably closer to the customer. He is out of touch, and selling by an old paradigm....failing in the new.

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