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Editorial: Graceful assault on Harvey

Editorial: Graceful assault on Harvey

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At first glance, Coles Myer opening a new Megamart store in Sydney is no huge event in the grand scale of the IT retailing scene. After all, the concept is about furniture and electronics, not pure PCs and associated technologies. It is just one store in Sydney. There is still much more work required to shake the dominance that Harvey Norman enjoys in Australia's largest, most important market.

In reality, furniture takes up half the store anyway and electronics the other half. Within that space allocated to electronics, perhaps 30 per cent is dedicated to IT hardware, software and accessories. So the bottom line is they are only setting aside about 15 per cent of the floor plan to IT.

No big deal, you might say. However, there are many pointers indicating that this is a far more serious play at the IT retailing scene than first meets the eye.

Have no doubts about it, we are talking about one very large store here. The Megamart that Grace Bros has opened in Auburn is 10,000 square metres. That's almost as large as two rugby football fields. When you have 15 per cent of 10,000 square metres, you're talking about a substantial amount of space allocated to IT.

Approximately 14,000 square feet by my quick and rough calculations. If you keep in mind that the signature size for a Harvey Norman superstore is around 10,000 square feet, you start to get a picture of the scale we are talking about here.

Perhaps it is not such a coincidence that Harvey Norman is stepping up its presence in the same suburb. It announced plans last month to open a mammoth new facility in Auburn that promises to take IT retailing to the next level.

Having toured the new Grace Bros facility with Megamart MD James Galloway and Myer Grace Bros MD Dawn Robertson, it is clear that the store does not have the diversity of range seen in a Harvey Norman franchise.

But, it is interesting to note that there is a new willingness for the Myer Grace Bros division to leverage the connection to specialist IT retailer Harris Technology, a sister company in the Coles Myer family. This means that what cannot be supplied by Megamart can be sourced via the Harris Technology Web site.

Another factor clearly showing Coles Myer's determination to garner a larger slice of the IT dollar is what the Megamart people call its "complete low-price guarantee". Galloway said Megamart staff will be very serious and very thorough in delivering on this value proposition. It wants customers to know that the best prices in town will be at Megamart stores.

The Auburn store is hoped to be the first of many Megamarts in Sydney, Galloway said. At least two more are to be launched at yet-to-be-disclosed times and locations, with Sydney expected to eventually be home to as many as five or six.

I doubt very much that Gerry Harvey is quaking in his boots at the prospect of Coles Myer taking his IT retailing thunder. However, I would say that part of the motivation for his new super-duper store was the arrival of the Megamart on the doorstep of Harvey Norman's traditional and spiritual home in Auburn.

It should also never be forgotten that along with Woolworths, Coles Myer is a true giant on the Australian retailing landscape. The fact that Harvey Norman blind-sided it in the IT category nearly 10 years ago with the superstore concept has never sat that well at the boardroom table.

This could be the beginning of the fightback.


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