Australia’s retailers are angry. Not only are they being walloped by poor consumer confidence, rising interest rates and deflation, but now they are being deserted by Australian consumers who are using the strong Australian dollar to shop overseas – without the GST.
That has led Myer chief Bernie Brookes and Harvey Norman chief Gerry Harvey to claim they will consider setting up websites in China to sell back into Australia GST free, thereby levelling the playing field.
‘We just want a level playing field. We will take jobs offshore and we will ship product out of China through our internet site, it’s a bloody shame,” Bernie said last week.
Are Brookes and Harvey for real? They seem to be, or at least they seem genuinely angry about what they see as the leakage of sales to overseas sites.
But whether the sites actually get up, or when they might get up, is probably still a bit up in the air, particularly in the case of Harvey Norman, which is at its heart a franchise business.
Whether the franchisee in western Sydney will like the idea of being undercut by a website based in Beijing remains to be seen, particularly given many franchisees don’t like the idea of competing with a Harvey Norman website based in Australia.
And of course, there is more than a bit of irony in Harvey and Brookes’ sudden appetite for online retail. Neither company has made online a central part of their sales strategy and Harvey once famously told SmartCompany online retail was a dead end.
Now the pair are being forced to react to the online retail juggernaut.
But could their Chinese strategy really work? The big-name brands of Myer and Harvey Norman will certainly attract some customers, but to really stand out in the world of online retail you need a point of difference, be it price, range, service or specialist expertise. Your strategy and online reputation needs to be honed over years, and not hastily cobbled together and stuck up on a site in China.
While it’s certainly better late than never – particularly for Harvey Norman – these are two companies with miles of ground to make up.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
