Economy

JB Hi-Fi chief backs Gerry Harvey; online retailing “makes bugger all”

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JB Hi-Fi chief executive Richard Uechtritz has backed Gerry Harvey in the online retailing debate, saying Australians have not embraced the online retail culture.

JB Hi-Fi chief executive Richard Uechtritz has backed Gerry Harvey in the online retailing debate, saying Australians have not embraced the online retail culture.

“I guess I’m only a fan of things that make a lot of money. Online retailing in our industry is certainly not one of them,” Uechtritz says. “When you’re talking about the percentage of sales that go through online retail – it’s small.

“We run one of the most sophisticated sites, and it makes bugger all for our business.”

Harvey Norman executive chairman Gerry Harvey sparked outrage from SmartCompany readers when he declared online retailing is “a waste of time”.

“I’ve got an online part of my business, but I definitely would not put more into it. That’d be a recipe for a disaster,” Harvey told SmartCompany.

“Online people do not make any money. The whole world was conned with online retailing,” Harvey said. “People say I’m a dinosaur, and I’ve had people coming to me with sites and saying, ‘Oh, look at this, they have 10,000 or 20,000 hits!’ – but it’s a con, a complete con.”

Uechritz agrees.

“Australians have never had a culture of mail ordering – the forbearer of online retailing, the only difference being it’s on the internet. I guess two reasons. We’re probably the highest urbanised country in the world, or one of them.”

“Certainly, on top of that, we have substantial catchment areas such as Geelong etc that have retailers, so it’s not as though we’ve got a whole lot of little towns that are not accessible.

“Secondly, I think it goes back to the old days of Australia Post – Australia Post not being the most efficient distribution company for many years. Of course, consider the costs of transporting to some of the smaller populations because of the distances that are involved.

“These online retailers will say, ‘we don’t have rental costs or staff costs’, but they have distribution costs and the same processing costs and packaging costs like everyone else.”

But despite Uechtritz’s protests, he says online retailing does have its place in the market.

“Online retailing has its future – you’re always going to catch somebody out there. I think it’s important to have an online presence, you’ve got to have that these days because people do research online. That’s accepted,” he says.

“In our industry, you research whether you should buy a Sony or an LG, and you do that in your own time. And then you go into a retailer because you look, feel and touch, plus a retailer that has a service and sales staff that are knowledgeable.

“I’m not talking about getting a second hand iPod off eBay or something like that, but the larger products.”

But Uechtritz says if online retailing begins to take a larger share of sales, the bigger companies will be more suited to making the switch.

“If it does go that way, we’re in a lot better position than a small operator starting, because we’ve got the supplier relationships and we’ve got the brand name.”

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