Gerry Harvey has high hopes for overseas market growth

To account for 50% of group profit in the long term.

In line with the rest of the market, the housing and mining downturn coupled with subdued consumer confidence, has taken a toll on local sales for Harvey Norman and chairman, Gerry Harvey is not expecting a turnaround anytime soon.

“I expect the economy to remain flat for at least the next 12 months,” Harvey told Appliance Retailer.

Total sales from Australian franchisees fell 1.7% during the first half and continued to fall by a further 3.2% in the second half for the period 1 January to 25 February 2019.

But he isn’t going to sit back and wait for things to get better.

Harvey Norman Millenia Walk store in Singapore

“We need to concentrate on doing business better. As a team we need to work harder and work smarter even though we know it’s not going to be easy. As a retailer you need to offer a unique proposition and for us, we do this through our flagship strategy.

“Our recently opened Auburn flagship in Sydney is trading very well so far but it has only been open for a few months so we would need to give it another 12 months to realty assess its performance.”

Harvey is keen to open more flagship stores across Australia but he says finding another site is like looking for gold. “You just can’t find it so it’s difficult to expand but it is an important part of our business with our Auburn store bringing customers from all over NSW not just surrounding suburbs,” he said.

Inside Harvey Norman Millenia Walk

When asked about the most successful categories over the past few months, Harvey said air conditioners and fans have been selling well but as seasonal products they are very dependent on the weather.

“Refrigerator and washing machine sales have also been good but there is no real newness in these categories. We need new product to boost sales. We need the must-have ‘hot’ products. Large screen TVs have advanced in picture and sound quality and it has enticed customers to upgrade sooner. It will be interesting to see how customers respond to the incoming foldable smartphones.”

As local trading continues to face challenging conditions, Harvey will take advantage of the overseas markets by looking for opportunities and increasing the retailer’s store footprint.

“There is no question that our overseas stores are driving the sales growth and our long-term goal is for offshore profit to account for 50% of our group’s profit. It is now 25% of our profit and people weren’t even expecting us to achieve that. They kept telling us our overseas expansion was a “waste of time” and our performance was “bloody hopeless”. So we are proud to see that our investment is paying off.”

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