Friday, January 7, 2011

Gerry retreats from issuing consumer alert to web value

So what did Gerry Harvey achieve by joining Myer's Bernie Brooks in leading the charge in the ill-conceived campaign to promote a GST on goods under $1,000 bought on the internet from overseas? As Harvey Norman's share price plumbed new depths, his primary achievement was probably to alert the large majority of consumers who didn't shop on the net that there was good buying to be had on there.

Let's face it, the vast majority of Aussies don't tune in to the daily movements in foreign exchange, don't have confidence in buying remotely from overseas vendors and - surprise, surprise - seem to have made air-conditioned shopping centres the venues for regular village get togethers during the hot summer months (whether they buy anything in them is another question!). And I think Harvey Norman even has stores in many of these centres, doesn't it?

Another campaign 'achievement' was to damage his own personal brand, closely linked as it is to the retail colossus that carries his name. Hard for a guy who owns some of Australia's best thoroughbreds, the annual Magic Millions showcase on the Gold Coast and many other baubles to earn sympathy from  battlers who buy on the net to save money.

I wonder whether the retailers' GST campaign was inspired by the pre-election mining tax campaign, which seems to have gained more traction. If so, it failed to recognised a fundamental difference between the two issues. This is that the mining tax campaign focused on a single, politically sensitive issue - jobs. The GST campaign, by contrast, tried to build around job losses, but was derailed by a far more personal issue - big retailers wanted every little guy trying to save a buck to pay extra tax.

Less tax for miners to create more jobs versus more tax for individuals to save more jobs - it's an absolute no-brainer working out which one will gain public support. The retail campaign focused on tax and jobs, but in the rush to press failed to recognise where the point of hurt was.

Gerry is now taking a lower profile in the GST campaign, acknowledging it the communication was poorly executed, but that the campaign is still valid. Perhaps some retailers should glance across at what Bunnings is doing at the moment - reducing slow-moving and non-profitable lines, adjusting its inventory to make way for a move into high-value items like knock-down kitchens, carpet and so on. That's in anticipation of greater competition from the new Woolworths big box hardware chain.

Rather than moan in the face of competition, Bunnings is creating more reasons for people to visit its stores by stocking homewares supported by in-store advisory services. That's what retailing is about - convenience and a value-added store experience. They're things you find hard to match for less than 1,000 bucks on the net.


  1. Hi Geoff,

    Gerry displayed a staggering lack of awareness, it will be interesting to see if it has any impact on HN's future success. I'm sure his franchise owners aren't particularly happy. With any luck it will raise consumer awareness around the price discrepancies between Australian retail goods and what Americans pay and prevent oligopolistic Australian retailers from gouging Australian consumers so blatantly in the future.

    I'm surprised Mark Ritson hasn't commented on it yet.

    Kind regards,


  2. Thanks Ed,
    Attended a superannuation meeting the other day and I saw a lot of parallels in it. The concern of the funds is leakage of people and assets to Self-Managed Super Funds (SMSFs). To me, it came down to accepting that, rather than swim against a major consumer trend, let's develop products and services to allow us to ride the wave. Not dissimilar to the conclusion HN et al will have to reach sometime soon.


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