FACT: Business as usual for Coles Myer and Compaq

FACT: Business as usual for Coles Myer and Compaq

Contrary to misinformation being circulated in some channel news quarters, Australian retailing institution the Coles Myer group and PC vendor Compaq are still doing business together.

Both Coles Myer and Compaq denied today that there has been a split in their relationship and both said that it is "business as usual" for the time being.

Ben Reeve, Compaq's segment and channels marketing manager and one of the people involved in the talks, confirmed there were some high-level meetings late last week which involved both local CEO Ian Penman and senior Coles Myer executives.

It was also confirmed by Compaq that the retailer did raise some issues with the vendor but that these had been worked through during the course of negotiations. Reports indicating that the two had parted company over these issues were plainly untrue, and circulation of such a story was malicious, Compaq said.

"It was concluded [after last week's meeting] that we would continue doing business together," Reeve said. "Our understanding is that it is business as usual. We will continue to work with [Coles Myer] and all our other retailers on business as it is and enhancements into the future."

Concerning information circulating that Coles Myer had followed Harvey Norman and dumped Compaq as a supplier, two sources from within the retailer said there was no truth to the story.

A Coles Myer spokesperson told ARN yesterday that despite Myer/Grace Bros being the only Coles Myer business unit selling any significant volume of Compaq PCs, the vendor was still an important computer supplier for it.

There had been "no change" recently in the relationship between the two as a result of the computer company's move into opening its own retail stores and high-level negotiations last week, according to the retailer.

"We had long discussions with Compaq last week [in relation to the supply of computers] but following on from that it is business as usual," the Coles Myer spokesperson said.

As published on ARN LiveWire last Friday, Myer/Grace Bros IT buyer Peter Geer -- who was in attendance at meetings with Compaq last week -- said that Coles Myer's business units would continue to sell Compaq products in their stores.

"It is always a concern when a supplier becomes a competitor but it has happened before and there is always room for compromise," Geer said after the meetings had been completed.

One industry insider suggested that in fact Coles Myer would be keen to take advantage of the $100 million hole Harveys left in the market when it ceased selling Compaq PCs. The source suggested any recent negotiations would be aimed at the retailer securing a better deal from the vendor rather than saving a relationship which is strategic for both parties.

"It is the ultimate way to negotiate a better deal," the source said, who asked to remain nameless. "When Harvey Norman dumped Compaq, Coles Myer was actually very happy at the opportunity it presented.

"[Coles Myer] doesn't care if Compaq goes direct because it is used to it. It's not a big issue. Country Road sells direct yet its range is still available at Coles Myer-owned stores."

The source indicated that most retailers have sought to renegotiate their contracts recently "because Compaq is on the racks" at the moment. Compaq retail stores are not the major issue that Coles Myer has with Compaq, according to our source.

"Coles Myer is frustrated with Compaq's Internet strategy," he said. "After it had spent so much money on its own online infrastructure it wanted Compaq to use it rather than develop its own."

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