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Editorial: Fighting back

Editorial: Fighting back

Three cheers for Harvey Norman's Tony Gattari. Hip, hip, hooray. Hip, hip, hooray, Hip, hip, hooray.

Last week's report by Gerard Norsa that Harvey Norman will boycott any vendor that tries to sell direct in Australia is my favourite ARN story of the year.

If any channel player is going to be able to take a stand, it's Harvey Norman. It is undoubtedly the largest, most powerful retailer in Australia, having basically defined the local superstore channel.

As such it becomes very much the case of the irresistible force meeting the immovable object. Because let's remember who Harvey Norman is taking its stand against. These vendors represent some of the world's biggest companies.

Gattari and Harvey Norman obviously feel that vendors like Compaq, IBM and HP are getting very close to launching direct programs in Australia. I have said in this column in the past that I believe it is only a matter of time before PC vendors are pressured by their US bosses to sell directly in Australia, despite their constant denials.

Being a pragmatist, though, I have also urged resellers to accept it and to remodel their operations so they aren't crushed in the direct stampede.

Not so Harvey Norman. Now that's not so surprising because retailers by definition sell product. And being the biggest computer retailer in Australia, Harvey Norman has the most to lose.

Still, I applaud Harvey Norman because this stance could easily backfire. As one observer said to me this week: "Are they going to have any vendor left to sell?"

As much as it has the potential to damage the sales of Harvey Norman or any other retailer or reseller that takes such a stance, at least in the short term, it is going to hurt the direct-selling vendor more. Any PC vendor that upsets these major retailers is likely to immediately drop a couple of places in the PC rankings. That hurts.

You can see it in their eyes

This is why you can see the fear in the eyes of most PC vendors when you raise the direct question with them. If it was solely up to the local operations, most vendors would choose not to sell direct.

It is not a model that has worked particularly well here - the channel is strong and influential in this country.

That's something that resellers should always cling to. You are the most influential buying force in Australia. As we reported earlier this year, research shows that corporate buyers are most influenced by their resellers. That is likely to be doubly so in the consumer space, where there is less general awareness and computer know-how. Buyers rarely decide on a Compaq machine then ring up Compaq to find out where they can buy it from. They walk into the retailer or reseller and then decide which brand to buy.

The reality is, I believe, most resellers will continue to have relationships with vendors even if they sell direct. But remember, you don't have to recommend them.

What to do? Fight or accept the "inevitable"?

This is one issue I'd love to hear your thoughts on.

E-mail me at philip_sim@idg.com.au.


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