How Gerry Harvey and co could turn public opinion around

This morning I was on Radio National’s breakfast program just after Gerry Harvey, who was asked first whether the consumer backlash against the big retailers’ campaign against the GST exemption on goods purchased from overseas meant the whole thing was now dead in the water.

Gerry didn’t think so, and went on again to claim that overseas players were getting a “free kick” while Australia’s big boys suffer.

He then went on to give an example of how his wife was able to buy a dress from a US store for $100 when it should have cost $170… sorry Gerry, but those 40%-plus discounts are exactly why Australians are shopping online.

As I said yesterday, it’s got pretty much nothing to do with the GST exemption. In Gerry’s example, his wife’s dress would have been around $110 with GST added on – that’s still well below the $170 she would have paid, and hardly enough to make the transaction uneconomic.

Gerry and Myer’s Bernie Brookes would have expected some backlash from consumers, but perhaps not as much as they have received.

News websites around Australia have been flooded with comments from consumers describing these retailers as out of touch, uncompetitive and old-fashioned. Indeed, it almost seems like this campaign is driving more shoppers to turn their backs on the big stores for good.

Certainly the politicians realise this. Assistant Treasurer Bill Shorten has made it very clear he won’t be the one to hit struggling households with an extra tax slug on goods bought online from Amazon or Book Depository, while independent Senator Nick Xenephon surely got the best line away when he describes Harvey and Brookes as “Goliaths pretending to be David”.

Seriously though, the big retailers should be careful this backlash doesn’t get bigger, and add to their difficulties caused by fragile consumer sentiment, rising rates, higher savings and deflation.

Perhaps the best way to do that would be to show they have listened to what consumers are saying and are prepared to invest to make their retail offering – both online and in-store – world class.

Instead of talking about setting up a website in China to become an overseas retailer, Myer should actually do it – and quickly. Show that you understand this market and can compete. Show that you know more about sourcing product that any retailer in Australia, and use the advantage to provide some great web bargains.

Instead of worrying about no-name websites undercutting his prices on cameras and computers, Gerry Harvey should use his industry-leading retail footprint to his advantage. Set up a model that allows customers to order online and pick up in store on the same day. Make your in-store staff class-leading experts, and deliver the technical advice that websites sometimes struggle with. And if you’re known for your ability to haggle, consider taking this online through something like live chat.

And take advantage of weaknesses of overseas players, such as difficulties with refunds and warranties. Promise online customers they can always come in-store and discuss a problem with a product, and you’ll never have to wait 48 hours for an email from the support desk.

Demographers will tell you that over the last few decades, shopping has become an actual pastime for Australians. We want to go into physical stores and touch and play and buy. I reckon that deep down, many consumers probably want to support big names like Myer, David Jones and Harvey Norman.

But consumers are not dumb. They know that retailers have been doing largely the same thing for the last 20 years.

And that’s fine if you are Coles and Woolworths, and you are constantly pushing down prices. But when there are cheaper options out there as there are on the internet, customers want to see retailers provide something more.

That’s what Myer, Harvey Norman and David Jones need to do – and quickly.


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