Gerry Harvey has vowed to fight Amazon “come hell or high water” and will even match prices with the retail giant if it hits Australian shores—but retail experts say SMEs don’t have to panic just yet.
The Harvey Norman boss told 9News Amazon is “coming here to send us all broke” and pledged that his business will be competitive on pricing and provide solid service to keep customers coming back.
“If they’ve got a cheaper price we will match that price, and we will give them the service, delivery and after sales service and they will be a lot happier,” he said.
However, retail experts and SME owners say that while big retailers are focused on Amazon’s arrival to Australian shores, there are reasons to stay calm.
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For one, the Australian retail landscape is still rooted firmly in bricks-and-mortar sales, and the global retail giant might find it more challenging to capture the market than it anticipates.
“When we look at Australia, it is a large, geographically diverse country,” says Retail Doctor Group chief executive Brian Walker.
“Amazon won’t find it as straightforward as in the UK and US. I think we’re going to see some fight back obviously from very strong home grown retailers.”
Dr Gary Mortimer, associate professor at QUT Business School, says Australia continues to get ahead of itself on the prospect of Amazon’s local arrival.
“The discussion around Amazon’s potential impact to the market has been somewhat overinflated. When you look at the size of their online market here in Australia, it’s relatively small. It’s not a massive market,” Mortimer says.
Secondly, small retail businesses have traditionally not been able to match the bigger retailers on price, and business owners have told SmartCompany their approach to fighting global online retail has been more around customer service—an element of the business they can grow no matter what Amazon does next.
Mountain Bikes Direct co-founder Jen Geale says the online bike parts retailer’s approach to competition from global online retailers is to build up the connection between customers and the business’s small team.
“There are plenty of sites that exist in an Amazon world,” Geale says.
“We can be the small team, for example, people like seeing that we’re real people.”
In December 2016, speculation about Amazon’s entry into the Australian market ramped up, with news the retailer had registered hundreds of trademarks for a range of products.
At that time, retail branding experts told SmartCompany smaller local retailers should use that news to motivate them to bed down a strong personal connection with their users.
“Who is your consumer, how are they influenced—think that through all the time, but do it now,” Retail Oasis strategist Pippa Kulmar said.
In terms of retailers like Harvey Norman being able to price match with Amazon, Walker believes there would be strategic conversations going on now at the electronics retailer about the best way to approach this, while Mortimer says care needs to be taken for this approach to be effective.
“Gerry Harvey’s comments regarding price matching … [tend] to suggest it’s probably more about marketing his brand,” Mortimer says.
“The Harvey Norman businesses are franchising, so price matching will put cost pressures on franchisees.”
For the moment, Australian business owners should consider the enduring appeal of bricks-and-mortar, Mortimer says.
“I think bricks-and-mortar retailers will always dominate the market; it’s quite a social experience to shop.”
SmartCompany contacted Harvey for further comment but did not receive a response prior to publication.