Harvey Norman is turning its back on home turf as gloomy retail conditions bite.
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That’s according to a sulky Gerry Harvey who continues to spin the doom-and-gloom party line that is now Harvey Norman’s staple.
“It’s got to the stage where there’s no incentive to open a major new store in Australia. None. Our rate of expansion in Australia would be lower now than it’s ever been in Harvey Norman’s history,” Harvey told the Australian Financial Review this week.
This comes as Harvey’s Chairman reveals plans to open ten new stores in South East Asia by the close of 2012, expanding its presence in Malaysia.
This anti-Oz stance could have something to do with the lack of traction Harvey received on his GST argument, where along with other bricks and mortar giants including Myer and David Jones, called on the government to introduce tax on all goods sold online under $1000, which local bricks and mortar retailers are forced to pay, insisting the loophole created an uneven playing field.
However, a recent government backed Productivity Commission report indicated the introduction of such a tax, which would hit mainly online operators, would cost more than it would bring in by revenues.
But now it seems Harvey’s going gung-ho offshore in a bid to dodge the tax it so desperately sought to introduce. Just last month, it made the bold move of setting up a direct import site selling games from offshore.
Harvey’s already has some international presence – in Ireland, Singapore, New Zealand, and even Slovenia, Croatia, but also warned recently of more store closures locally following a spate of shut downs across Australia.
In November the electronics giant placed two Rick Hart branded stores in O’Connor and Mandurah, both in WA into administration and closed four Clive Peeters and a further three Rick Hart outlets in the September quarter.
The strength of the Australian dollar, price deflation and intense competition were among the adverse conditions hitting sales.
“It’s a turning point in retail – some will survive, some won’t. The whole Australian economy is running on resources. The rest – retail, tourism, media – we’re all struggling,” Mr Harvey also said.
Well not quite “all” Gerry.
Harvey’s main rival JB Hi-Fi is set to open 6 new stores later this year on the back of the 10 already opened just before Christmas.
“We maintain our FY12 target of 16 new JB Hi-Fi stores with 10 stores already opened prior to the important Christmas trading period and we are on track to open the balance of 6 stores in the second half of FY12,” the retailer confirmed last month.
In total, it hopes to have 214 JB Hi-Fi stores open in the next 4 to 5 years, in spite of recent sales dipping 1.8%.
However, Harvey is correct when he says retail are in some trouble. Woolworths are also looking to offload Dick Smith with Woolies chief executive Grant O’Brien saying its investment in the chain is to be reviewed following poor performance.