Thursday, January 6, 2011

Customers give Harvey Norman the stick

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Gerry Harvey's demise will ultimately be tied to his ego; or should I say his pretense of one, which compels him to be self-righteous. He will show that 'perceptions are more important than ever'. A web poll by the Sydney Morning Herald shows as much. The reality is that he has highlighted to non-discerning customers how irrelevant traditional selling is. I personally walk through his stores all the time; but I never buy. I have this curiosity about going into stores, just looking. I would never think to buy from such stores. I do the same from Dick Smith. They are all over-priced. They will all suffer. It might actually be the 'spoke in the wheel' which causes the big shift to online commerce in Australia. What a paradox.
This story suggests Harvey was always very negative on online commerce. I am not a retail analyst, so its interesting to observe that all these retailers (e.g. Fosters, David Jones) failed with their acquisition of online businesses. I think their attempts to buy competitors was always a very defensive and deluded strategy. Akin to plugging up holds in a dam wall. Know doubt the equity markets at the time probably loved the strategy, thinking these companies were trying to remain relevant.
The suggestion that the distances in Australia are a setback is false. A great many shippers have stock, and if there are low margins delivering in Australia, they can always drop-ship from the supplier. It is argued that 'many people are still wary about buying online', but Harvey has given them reason to take a second look. Indeed, buyers should know that they can always charge back any goods which are not delivered within 30-60 days with Paypal. Of course the seller ought to have the first opportunity to correct the problem, whether its a faulty product, etc. If consumers knew that they might just be more willing to take the plunge.
I think this commentator is on the mark:
"Harvey Norman's problem isn't 10% worth of tax, it's that his customer base are people too stupid to shop around" and I would argue too gullible to test his bluff on matching 'his price guarantee". The guarantee probably comes with so many pre-qualifications that is not even a real or effective guarantee.
Another commentator confirms my suspicions. The damned fine print. The secret to the modern businessman's success. Bury the customer in paperwork and loopholes.
"Dick Smith Electronics' excuse [is that] they will only price match if the competition is within 100km radius".
Thank you Gerry Harvey for showing that even idiots can succeed. You are the best evidence for capitalism and the utter uselessness of the welfare state.

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