Comment by Patrick Avenell
SYDNEY, NSW: Ruslan Kogan has today taken a needless swipe at old foe Gerry Harvey, criticising Harvey Norman’s decision to purchase a number of stores from the Clive Peeters network following that company’s collapse.
In a release to media today, Kogan declares, “Buying Clive Peeters was a huge mistake by Gerry Harvey”. He justifies this by saying that combining two of what he calls “ageing business models” is like trying to make a right out of two wrongs.
The truth is, Harvey Norman and Clive Peeters had markedly different business models. Clive Peeters stores were centrally owned, with offsite warehousing and no scale for proper marketing outside its native Victoria. Harvey Norman, on the other hand, operates a mature franchise system and has the best economies of scale of any listed retailer in the country.
This difference in business models is one of the reasons Harvey Norman purchased selected Clive Peeters stores. With Harvey Norman now able to provide strong warehousing and marketing to the existing stores, these Clive Peeters stores, many of which were profitable, will become more sustainable.
As reported extensively on Current.com.au, Clive Peeters did not fail because of bad sales. Its failure was a combination of bad efficiencies and the fallout from the $20 million theft committed by one-time employee Sonya Causer.
Ruslan Kogan has made some very prescient comments about the need for established retailers to adapt to new conditions, but today’s spray was totally misguided and ill-informed. Furthermore, on a micro level, Harvey Norman’s purchase of Clive Peeters store enabled hundreds of hard working Australians to keep their jobs, and that is something that should be celebrated, not criticised.