Harvey Norman’s retail pyramid and how to get consumers paying more

By Patrick Avenell

SYDNEY: According to Harvey Norman executive director David Ackery, there are three types of electrical retailer. Together, they form the pyramid of choice for the consumer. Ackery presented this scheme to delegates at the Get Ready for Digital TV conference in Sydney this week.

At the top of the pyramid are the Premium stores. At these stores, customers will get complete service, accurate advice, installations, consultations and demonstrations. Being at the apex, this environment is the smallest of the three types, and the prices are the highest.

The middle level, both on the pyramid and in terms of numbers of stores operating this way, is the Promotion stores. Ackery believes this group is characterised by “fair and reasonable prices, some of the services of the premium stores and promotional activity”. Popular promotions at this level include warranty deals, buy-this-get-that offers and finance incentives.

Ackery believes that Harvey Norman is a player at the promotion level of the pyramid.

The lowest and largest level of the pyramid, the base as it were, is Price. At this conference, which dealt with how best to move forward into the era of digital television, Ackery warned against both suppliers and retailers advertising products and services in the digital television switchover based on price.

“The consumer walking into the Premium store will have no issues; the Promotion store, little issue; but if we drive people into Price, there will be too much confusion,” Ackery told delegates.

To execute this switchover successfully, and hence drive consumers to Promotion or Premium stores, Ackery called on the stakeholders to get the appropriate and correct information together, and then broadcast it to retailers and the public.

“We’re [retailers] at the end of the information drag,” concluded Ackery. “We don’t want to be sitting there at the end of the pipeline trying to hold it back with a twig.”

What do you think of the Retail Pyramid? Is your store Premium, Promotion or Price? Send me an email.

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