Staying at the top

Retailer of the Year - Harvey Norman

Harvey Norman started as a lone shopfront in the Western suburbs of Sydney. Now customers from as far afield as Northern Ireland and Slovenia can shop at its retail stores and super centres. But staying on top has never been easy, as the company’s computers and communications general manager, Luke Naish, well knows.

“We certainly don’t take our competitors for granted. We’re very cognisant and aware that everyone wants to knock you off,” he said. “We’ve been the number one computer retailer for a long time now and the biggest challenge is staying one step ahead of the market and reaffirming your value and your position of loyalty with the customer base.”

If hungry rivals weren’t enough, the global financial crisis that affected global retail spending has been a constant source of concern for the multinational franchise operation.

“We’ve gone through a very interesting time and the next six months will still be interesting. Interest rates will have quite an impact on consumer sentiment, but I’m certainly very happy with how we’ve travelled in the last 12-18 months,” Naish said. “We were expecting the worst but fortunately that hasn’t happened. I think we’re emerging from our current economic period but I think it’d be premature to paint it as a bed of roses.”

When asked why he thought Harvey Norman won the Retailer of the Year award at the 2009 ARN IT Industry awards, Naish pointed to its long-term dominance of the computer sales market in Australia and ability to spot what consumers will buy before they know it.

“At the turn of the century, there was a strong move into IT retailing, by which time Harvey Norman already had an IT retailing retail division, which gave us focus and clarity,” he said. This meant that by the time other chains aimed for IT as the path to profits, Harvey Norman was already the incumbent leader – ready to take on the lessons learned from failed competitors. “At one stage, there were a number of regional players like Chandlers, Archie Martin and the like. Some of them were just poorly managed, some of them lost their connection to their customers and some of them just didn’t have the business scale to survive,” Naish said.

One of the key lessons both Naish and the wider Harvey Norman business have taken on-board is the need for customer loyalty and excellent staff training. Given the rapid growth of retail stores hosted on the Internet with lower outgoing costs, physical stores are at risk of losing relevance.

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“I think inevitably e-tailing is a space we’d be interested in,” Naish said. “Our focus is to drive customer traffic back into our stores but we know ultimately that customers do want choice and know that will be something we need to address.”

In the meantime, the franchiser is boosting training to give customers a reason to make the trek into its physical stores.

“We have an e-commerce site, which I require everybody to participate in whether they be staff, managers or franchisees. They’ve all got to do at least eight e-learning modules online every single month,” Naish said.

He claimed its single biggest difference was the quality of customer service delivery. “Today’s consumer is far more knowledgeable, far more proactive and far more comfortable in purchasing from a variety of different sources so the challenge for companies like Harvey Norman is to remain relevant and keep lifting the bar,” Naish said.

It may be hard to believe the bar could rise any higher in this uncertain financial climate, but fortunately the general manager foresees a positive year ahead. He labelled it a process of evolution, not revolution.

“I’m very confident with the opportunities available and what we need to do to reach our potential. I think the global economic crisis has been a good been a positive thing for us because I think it’s brought in a more disciplined, more focused approach to how we do things internally,” Naish said.

“We’re going to revamp our Web presence to update and reinvest in the store layout and we’re going to continue to lead the market with new technologies, which we always have, whether it be the launch of Windows 7 or our photocentre.

“Next year, we’re also launching a certificate in business sales for our frontline retail staff. That’ll be the highest retail qualification for any retail staff and will be the first in Australia.”