By Claire Reilly
The figurehead of one of Australia’s largest consumer electronics retailers has said there is “no incentive” to open new stores in Australia, considering the current downturn in the retail industry.
Speaking to the Australian Financial Review, Gerry Harvey said that Harvey Norman would focus on its overseas offering in the near future, and that the company’s growth in Australia was experiencing unprecedented stagnation.
“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 that it’s ever been in Harvey Norman’s history,” Harvey said.
He was also pragmatic about the current downturn in retail. “It’s a turning point in retail – some will survive, some won’t,” he said. “The whole Australian economy is running on resources. The rest – retail, tourism, media – we’re all struggling.”
Rather than expanding in Australia, Gerry Harvey said the company would focus on its overseas ventures. “At this point in time, there is a lot more opportunity and incentive to focus on that market,” he said. “As retailers, we have very little choice but to allocate more funds where the growth will be.”
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The total value of the company’s property portfolio was $1.83 billion at last count (when valued on 31 December 2009). The lion’s share of this value lay in Australian and Singaporean investment properties, as well as land and buildings in New Zealand, Slovenia and Singapore.
As at June 30 2011, Harvey Norman operated a total of 31 stores in New Zealand (under the Harvey Norman and Norman Ross brands), 14 Harveys stores in The Republic of Ireland and 2 in Northern Ireland, as well as 13 outlets in Singapore and 7 in Malaysia which are run in a joint venture with Singaporean company Pertama Holdings.
In Harvey Norman’s 2011 annual report, the company noted that sales revenue in stores across New Zealand, Northern Ireland and The Republic of Ireland all decreased for the year ended June 2011. However, the four stores in Slovenia saw a combined 15.2 per cent increase in sales revenue for the same period, while Asian sales (in Singapore and Malaysia) were up by 5 per cent when measured in Singapore dollars.
According to the report, “the Harvey Norman branded stores in Singapore and Malaysia continue to grow market share and outperform competitors.” In addition, “the Harvey Norman stores in Singapore have performed well [and] the Malaysian operations are expected to be a growth area within the Asian segment.”