Harvey Norman Goes Online Despite Franchise Operation

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As JB Hi Fi look to sell appliances online, Harvey Norman boss Gerry Harvey has said that his company is close to rolling out a new online store operation.

What he has not explained is how he intends to placate his Harvey Norman franchisees, who in the past have wanted a share of any Harvey Norman online operation.

The electronics retailer’s franchise model and extensive property holdings were long considered stumbling blocks to Harvey Norman’s entry into the online market, industry sources said.

Southern Cross equities retail analyst Paresh Patel told the SMH  that the online move was an acknowledgment of the shifting retail environment.

In addition to eroding traditional sales, the shift may also put pressure on commercial property values, he said.

“If sales online take off then what does it mean for the store and the rents they can demand for the store owners?” said Mr Patel.

“By this time next year you’ll see Harvey Norman with a pretty sizeable internet presence. My heart’s beating very strongly on whether we make any money out of it,” Mr Harvey said. “I haven’t got any choice. I’ve got to cannibalise our stores.” He told the Sun Herald in Melbourne.

Currently there are 173 Harvey Norman stores which in the past has been a major problem for the Harvey Norman Chairman who  led a major campaign last December for a 10% GST levy to be applied to overseas online purchases.

 

Last month, Myer launched a China-based retail website called myfind.com.

Arch rival JB Hi Fi already has a strong web site operation that last month grew 65%.

However the Myer site has a limited range and does not compete with the variety of brands in-house.

“Harvey Norman has been the pace-setter for an awful long time,” Mr Harvey said. “They’re kicking us on the internet at the moment but there’s no history of anyone making money on it.

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p >”I’m not against it. I’m trying to get on at the right time.”he said.

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