A load of old rubbish: That is Gerry Harvey’s assessment of his company’s omni-channel strategy, as he rejects online retailing
This is in stark contrast to Harvey Norman’s Chairman comments released along with the retailers FY12 results on Friday , in which Mr Harvey hailed its new omni-channel strategy as “backbone of its business” and said it had made “strong progress throughout the year”
In an interview with Business Day on Friday, 73-year old Harvey Norman Chairman, Gerry Harvey, labelled his omni-channel strategy including digital, in-store and mobile components as a load of “spin and bullshit.”
“You devote all this time to your omni-channel and integrated bloody … and you go on with all this bullshit and the result is that it is 1 per cent of your sales. But if you don’t go on with the bullshit you are out of fashion, you are not with-it.”
“I am reluctant to do it but I do it, because if I don’t they label me a dinosaur.”
On the omni-channel speel, which every major retailer from Myer to Officeworks is shouting about of late, Harvey added: “You have to have it, the problem is that as a public company you have got to give the spin, so every company is out there giving the spin and we do the same thing.”
On Friday, Harvey Norman announced a massive 31.6% slump in net profit after tax to $172.47 million for the year ending 30 June 2012.
Harvey FY 12 sales slumped 8% FY12 with every quarter, bar the first, showing a fall of almost 10%.
Harvey blamed “a glut of products sold at never before seen prices” flooding the market following the demise of retailers WOW Sight and Sound, Retravision and Dick Smith’s restructure, for the tumble in profits.
This could be another part of Mr Harvey’s “spin” as the CEO of JB HiFi, Terry Smart, said his company, whose net profit fell 5% to $104.6m this year, had not been impacted nearly as much by stock dumped into the market, as claimed by Harvey Norman.
“And everyone does it,” Mr Harvey said, “but then when you check with Myer or David Jones, whoever, JB Hi-Fi, Good Guys, its nothing of their sales, somewhere between half and one-and-half per cent.”
JB Hi-Fi recently stated its hugely successful online operation was driving sales and almost 1 million visitors trawl its website every week. Online sales accounts for 1.6% of total sales at JBs.
However, Alan Oster, NAB’s Group Chief Economist begs to differ with Harvey’s negative sentiments on the web, saying the channel is just going to keep growing stronger and stronger every year.
NAB’s Online Retail Sales Index relased on Friday, showed online sales are growing over 20% annually, and although from a small base, is increasing five times faster than bricks and mortar retail.
Traditional retail sales were worth $220 billion for the 12 months ending June 2012, while online retail spending hit $11.7 bn.
“Online is still a new channel but it’s an important and growing one and although accounts for 5.3% of traditional bricks and mortar sales, in five years time this will be 10%.”
And Oster doesn’t see it slowing down any time soon either, adding retailers have no choice but to go online.
Big name retailers like Myer, and David Jones adopted an onmi-channel strategy as “they realised their lunch is being eaten if they didn’t”.
“However, in consumer electronics sector, whether you’re online or not it’s still tough at the moment,” he adds.
There are also different demographics for traditional retail and online consumers. NAB’s Index shows fashion and department stores are the biggest online sales category, with 30 and 40 year olds among the biggest spenders while in traditional retail, food is the always largest category.
