Gerry Harvey says he will take the fight to Amazon “come hell or high water”

Gerry Harvey

Harvey Norman chairman Gerry Harvey. Source: Supplied.

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.

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.

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Consumer
Consumer
3 years ago

The only thing Harvey Norman offers now is price. Gerry Harvey’s business already fails on service, delivery and after sales support so he is talking through his hat. I say bring on the competition.

Claymore
Claymore
3 years ago
Reply to  Consumer

I tend to disagree with the above statement “…the only thing Harvey Norman offers now is price… business already fails on service, delivery… after sales support. I have been a HN customer for decades and the reason for that is service, price and after sales support. I agree there is always room for improvement, but, compared to many other large retailers… they are pretty good. Let’s give credit where creidt is due and not fall into the bag everyone syndrome. We need to support local or perish economically. Amazon will not create more jobs than it destroys. Amazon preys on the selfishness and greed of individuals who do not give a hoot for their country. Support Australia for a change.

Consumer
Consumer
3 years ago
Reply to  Claymore

I am glad for you Claymore that you are happy with your HN experiences. For us and loads of people we know, HN has been a total nightmare. Last purchase we made from HN was a $6500 lounge suite, ordered and paid for, proposed delivery well before Christmas 2015. Actual delivery was May 2016, 6 months late. And, the goods are damaged. It’s now February 2017 and still no satisfaction. HN’s solution is for us to pay for freight and repair, estimated $1500, and they will consider reimbursement. Hardly a “bag everyone syndrome”. I hope Gerry gets the competition he deserves. In the meantime we wont shop there and will exclusively support other Aussie retailers.

Claymore
Claymore
3 years ago
Reply to  Consumer

Hi Consumer, I’m really sorry for your experience and definitly not a “bag everyone syndrome”, so I apologise for my comment and appreciate you sharing this information, it will make me consider my next purchase more carefully. Unfortunately my experience with other major retailes was not good, so we win some and we lose some. All the best and I agree to support Aussie retailers.

Zhompo
Zhompo
3 years ago

B&M’s will still have the advantage unless Amazon can both undercut local prices (unlikely- with all their shady supplier regional pricing contracts) and have super low domestic shipping. Amazon works in America because you can have something delivered for you at low or no cost to you, and the USPS allows for it. On bigger purchases, many consumers still want B&Ms for the security of warranty and other services. Amazon have far too many suppliers with restrictive regional pricing contracts. For example, Lego and makeup are artificially cheap in the US. Will Australians share the benefits of the “global marketplace” and get the same prices as Americans? Of course not is probably the answer.

E-commerce struggles in this country partly because of our uncompetitive postal system. It’s uncompetitive because we ship so much in from overseas, and have a CEO that apparently needs to be paid millions for cutting costs within the business. Go figure.

Brad Coates
3 years ago

I’m a small retailer who has endured the ramifications of the Australian Public’s love affair with the “absolute lowest price”, favouring Overseas Online Sellers and big Corporate “Box Movers” like Harvey Norman. Now, finally, the public are slowly beginning to realise that you really DO get what you pay for and I have no fears for my business going into the future.
We have seen a substantial increase in the renewal of trust to small business as opposed to the increasing distrust of Online and large Corporate business “Box Movers”.
Gerry Harvey would do well to worry….it’s businesses like Harvey Norman taking the short term profit gain awarded to those who advertise “We will NOT be beaten on price” now being played at their own game by even bigger fish such as Amazon.
You did it to us smaller retailers, Gerry, we survived, and now it’s your turn to reap the rewards of your actions. 🙂

Daniel Fisher
3 years ago

“Harvey Norman” & “Competitive on Price” …. two things that generally aren’t said in the same sentence.

Psytrix
Psytrix
3 years ago

‘Gerry pledges 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,”

What a load of BS. Good for you Gerry, only now that Amazon is coming do you decide that maybe you won’t get away with ripping everyone off by at least 30% – which isn’t going to slide anymore.

The level of service in your stores is some of the worst I’ve ever experienced, not to mention dealing with warranty, which was like pulling teeth. You’ve had more than enough time to change things up, price more competitively and improve company policy.

Cya Gerry.

Andy Das
Andy Das
3 years ago

Australian retailers and the government has its head stuck in the sand…. the level of service and quality doesn’t even come close to comparison to other countries and the market and the extortionists prices have pushed the consumers to go online.
High time for the industries to wake up and come out of the bubble or big businesses folding would be a common news in the very recent future.