Gerry, you're still wrong
You may remember a SmartCompany article published last November, quoting Gerry Harvey.
Harvey suggested further investment in online retail would be a "recipe for disaster". I can certainly see why Gerry doesn't want to contribute to the erosion of the existing Australian retail status quo (of which he is significant beneficiary). And of course further investment would drain capital expenditure and impact short term profits.
Harvey claimed that "the whole world was conned with online retailing" and that no one was making serious money. But many established US retailers now list their online store as their largest by revenue, and best by profit margin.
I certainly can't claim to have one millionth of the retail knowledge of Harvey, but I can claim to be closer to the web-connected, Generation Y and Z shoppers that will drive his business into the future. I have spent more online in the past month than I have in Harvey Norman in the past year. I am certainly an early adopter (and in the minority) but I'm far from unusual. Harvey Norman is an incredible retail performer, but imagine how much better they could be if they combined their Auusie market knowledge and buying power, with the online sophistication of Apple, Amazon or even Wal-Mart?
On a couple of occasions I have visited the Harvey Norman website looking for information while researching a major purchase decision. On realising that there was no detailed information available, I looked and eventually purchased elsewhere. The experience of multi-channel retailers in the US suggests that for every $1 of sales captured online, an online store drives $3 of in-store revenue. While the likes of Harvey Norman spend a huge amount of money shouting at customers through expensive 'push' media advertising, customers are pulling their hair out trying to 'pull' information about the products they sell. Give the customers what they want.
Investment our best insurance
Change can happen fast. Who would have thought a few years ago that Apple would be the world's largest music retailer, with 25% of all songs sold in the US being downloaded via iTunes? The laws of the universe suggest that if entities don't adapt in a rapidly changing environment they ultimately face extinction.
I would suggest that further investment (and the learnings that would follow) might end up being the best insurance against the global deconstruction and reinvention of retail and rapidly changing consumer behavior.
In contrast, Myer (who already sells a limited range online) and David Jones, have indicated that growing their internet businesses were becoming an increasing priority. These two have very trustworthy brands, are among the world's best performing retailers in the current climate, and I look forward to seeing them turn their hand to the web.
My prediction: 2010 will be the year that Australian online retailers and consumers leap to catch up with the rest of the world.
And those that evolve the fastest will be the retail winners of the next decade.
David Trewern founded DTDigital in 1996, and quickly established himself as a pioneer of digital marketing and website design and development. DTDigital has since grown to become
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Cheers, Craig
David,
I hope your prediction of 2010 being the tipping point year here in OZ is correct.
I wonder how much longer Gerry Harvey will let the online Kogan's & Deals Direct eat into his profits.
I think his bluster has more to do with not being able to find an online model that doesn't compete / irritate his franchisees than his oft quoted 'non belief' in the sector.
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