How Harvey Norman plans to remain relevant

Amid challenging retail market.

Aggregated sales for Australian franchisees declined 1.8% and comparable sales were down 0.9% for the year to 30 June, 2019, impacted by soft retail conditions due to the subdued residential housing market.

However, the new financial year has delivered a small turnaround for Harvey Norman with aggregated sales increasing 3.3% compared to the pcp and 3% on a comparable sales basis, for the period 1 July, 2019 to 29 August, 2019.

Speaking to Appliance Retailer, Harvey Norman executive director, David Ackery said the results for FY20 so far were pleasing, given the challenging retail market. He also confirmed a greater focus on last mile delivery.

“Franchisees located in metro areas are now able to offer store-to-door delivery with the option of upgrading through to a premium service with unpacking and setting up of product, and deliveries can now be tracked in real time using Trak by Harvey Norman.

“The franchisees have also upgraded their branding standards on their delivery vehicles, delivery drivers and enhanced their customer pick up areas. Click & Collect also continues to experience growth,” he said.

Roll out of premium format

With Harvey Norman flagship stores performing to expectations, new stores and existing refits around the globe are integrating the best elements of the flagship fit-out and design. This has already been executed in Malaysian, Singaporean, Slovenian and Irish stores and the premium format is now rolling out in Australia and New Zealand.

Harvey Norman chairman, Gerry Harvey told Appliance Retailer the company had chosen locations that give Harvey Norman stores a “decided advantage”.

“Our first premium refit in Australia at Harvey Norman Cairns (QLD) will be a beacon of the area – nothing will compare. We have carefully selected towns where we can enlarge ourselves because good looking stores help drive foot traffic and lift sales.”

Premium refits in Campbelltown (NSW), Balgowlah (NSW), Preston (VIC) and Aspley (QLD) are due to commence in the coming months. Mt Wellington and Hamilton stores in New Zealand are also in the pipeline.

Harvey continued, “I see the Australian retail market remaining subdued for the months ahead, even with lower interest rates, low unemployment and a stabilising house market, so we need to stay relevant and stay ahead of the pack.”

BNPL trend

As for maintaining relevance, Harvey Norman today announced its buy now pay later (BNPL) offering with long-time partner, Latitude (formerly GE Money) with the introduction of LatitudePay, following a successful trial with selected Australian franchisees and a successful launch in New Zealand.

LatitudePay will be available on purchases between $20 and $1,000 (product exclusions apply) and customers will pay off the amount in installments over 10 weeks with no interest charged.

Harvey described the BNPL phenomena as “strange”, but believes it has potential to be the next big thing. “I wouldn’t use it for my purchases – I don’t understand why customers would want to use the service for things that they could either just pay in full on credit or use interest-free options and have more time to pay for a big ticket item.

“There’s a lot of interest and I think it will help accelerate the business so we will be hitting it hard on TV, radio and press…but I’m not expecting a massive contribution to turnover…it’s difficult to predict.”

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