An Open Letter to Gerry Harvey

Dear Gerry,

I’d like to offer my condolences to you.

Your retail business is slowly sinking into the morass of an established business model that has been bypassed by younger, faster and more agile retailers. They realise to survive in retail today you need to do more than squeeze your suppliers for bigger margins to be in your catalogues and have loud advertisements on prime time TV.

Your inability to realise that the goal posts have moved and that you don’t know everything about retail is the greatest drain on your business.

Having low paid poorly trained staff in a shop full of things with prices screaming the size of the discount just won’t cut it any more with the buying public. You need to change and if you don’t you’re going to die.

You gave your online strategy four months before you started to change your expectations, the problem is your organisation has become so addicted to the ‘catalogue cycle’, where results can be measured within days that anything requiring an attention span longer than that of an average toddler seems to be too hard.

Adjusting your expectations of online contribution downwards by so much, so soon after launching just screams impatient loser, would you shoot one of your horses if it lost its first race?

If I had the resources you have to throw at an online strategy I’d be able to deliver better results, but, you’re too wedded to “yell and sell”.

Can I give you a few little suggestions for your online strategy as well as your ‘bricks and mortar’ stores.

Firstly for the stores you really need to get the staff to provide fantastic service, not good, not great, but fantastic - I mean the sort of service levels where people just want to go back because they were delighted by the way they were treated, not by the size of the discount.

Maybe the thoroughbred business has more of your attention nowadays but don’t forget the stores let you get into that executive circle in the first place.

Seriously Gerry, you're on a slow, painful decline to oblivion unless you realise the model that worked oh so many years ago ‘just don’t cut it no more’. You need new blood to turn it all around. I know your franchisees are going to get pretty pissed off if your online strategy means they’re going to have to reduce margins to compete, but, what you're doing just isn’t working.

Let me leave you with the experience I had at one of your stores not that long ago.

I walked in looking to buy something I needed for home. I knew what the rough price range was and so I went to my local store.

It was quiet, the staff were just standing around talking amongst themselves, judiciously ignoring me while I looked at the item I wanted. No one was willing to talk to me, obviously their discussions were too important to the business to provide service to a potential customer.

But then, the moment I picked up the box and started to walk towards the counter they broke ranks and rushed at me like a bunch of NFL players looking to crush a quarterback. They all wanted to write it up for me and carry the item to the counter. Where was all this concern for me when I was looking?

Now I don’t know what incentives you provide to your staff, but I’m guessing there’s something about the number of items they write up at a terminal before it gets to the regular check out counter. That really annoys me because it makes me, the customer, feel like I’m getting the service at the end only because it helps to line the pocket of someone who not five minutes before wouldn’t give me the time of day.

If I feel this way, I’m sure a whole lot of others do too.

I mean I know you did that Undercover Boss infomercial that was supposed to show how you were trying to improve customer service by doing the disguise thing - all it did was prove what everyone is saying about the abysmal level of service in your stores.

In the end I was so offended by the behaviour of the ‘sales’ staff that I actually left the store without buying the item, went to your opposition and got it for less and without having to deal with rapacious sales staff that barely hide their disgust for me as a customer.

I’m sorry Gerry but unless you listen, and I mean really listen you're going to end up as another piece of retail jetsam.

Mr. 1% Spend

Australian Retailers take aim at their greatest enemy...Australian Retailers and score a bullseye!

I recently came across this little entry.

Retailers are considering introducing a 'try-on fee' to deter customers from purchasing products online.
It was a call for opinions and feedback for a news site.

How about this for an opinion. “How. Fucking. Dumb. Are. Australian. Retailers.”

…and no, its not missing a question mark!

A bit of searching and I found this piece in The Australian ‘Shoppers hit with ‘try-on’ charges as retailers fight online rivals’.

I mean really. The only advantage these clowns have is that a customer can try something on and decide if they want to buy it or not, and so, instead of working that as an advantage over the evil hoards of slavering, rapacious online retailers that are laying waste to our poor, impoverished and unfairly treated retailers, they decide to give that advantage away by charging for it!

Well done. This takes biting the hand that feeds you to a whole ‘nother level.

Poor Mr. Mendels complaining that sales of his grossly overpriced True Religion jeans have dropped in Australia as people buy overseas for a still big, but far more reasonable price. My heart bleeds.

People will pay for good service and they will pay a reasonable uplift for that, but, when you screw them for every cent you can get they they will turn on you the first chance they get.

You haven’t treated your customer with respect, you have treated them as a walking bank that you can hoover cash from.

This is no way to stop people buying online, all you’re going to do is force them to do even more online shopping.

A galactic fail for Australian retail, oh, sorry, that’s their standard way of doing business...

It's nice to hear someone in retail say it!

This little piece just came through my inbox.

Aussie retail’s digital disgrace

Even if they get their online strategies right there’s still one little problem.

Service.

Australian retailers just don’t get it.

Retail staff are just a lowest common denominator factor in their thinking - ‘the less we pay for them the more money we make’.

People are getting sick of the shitful service received from these low cost drones so that now its a case of - ‘the less we pay for them the less money we make’.

Even Amazon who is online only gives better customer service than most Australian ‘bricks and mortar’ retailers.

Man up. You screwed up and missed the boat.

Stand up to your shareholders, tell ‘em you screwed up, but be damned sure to have a surefire strategy that’ll work, either that or tell ‘em you screwed up and quit.

Retailer Logic

Not that long ago I was looking at the Sydney Morning Herald before boarding a flight to Brisbane to spend another week watching a company flush itself down the toilet when I ran across this piece.

Lingerie chain may cut jobs as trading hits 20-year low

Bras N Things say that “the mounting burdens of higher wages, restrictive industrial relations policies and competition from online shopping could force it to cut staff”.

You’ll notice that the only reason that Bras N Things are in trouble is because of the three great evils - higher wages, industrial relations and online shopping.

I also noticed in the article that the company shelved its IPO earlier this year.

As I remember it when you’re going for an IPO you generally pump up the size of the business by opening lots of new stores to get the top line revenue up - in the case of retail that means getting into high traffic shopping centres (with stupidly high rents), carrying all the stock that your potential customers may want and having stores, lots and lots of stores. In fact, earlier this year they opened their 200th store.

Hell, they even trumpeted their online presence in this piece.

So let me get this straight, in an economic environment where everyone has been complaining about the retail environment Bras N Things have been growing at a rate of 50 stores a year. The Global Financial Crisis hit us in what 2008 and things have been in the crapper ever since? Dollar plummeted against the US back in whenever it was to around 67c and they opened 50 stores a year.

Now that they’ve grown and grown, making the business look good for people wanting to invest their hard earned in a float they discover “Whoops. Retail isn’t doing so good and our results don’t look so good”.

Maybe we need to wait for a better time to float, make our mountains of money and do a Myer to the investors.

Now since it can’t possibly be the fact that the business has been on a growth trajectory that isn’t supported by economic conditions it must be that the economy ate their homework, probably helped by the internet.

Wake up to yourselves! You’ve got your hand on the tiller, you’re responsible for the mess you’ve got yourselves into. If you didn’t realise what was happening then you shouldn’t be running the company and if you did and you got yourselves into this situation, you shouldn’t be running the company.

It really is that simple.

How to give good online

Ruslan Kogan showed everyone how to build great customer relations and make the opposition look bad in one simple statement.

He admitted their online website had a bug that sold stock at lower than actual price. He also said “we could hide behind our terms and conditions to get out of having to honour these transactions. Indeed, this is what many of our competitors have done in the past. But, we believe the bug in our website was entirely our responsibility and as a result will be honouring every single purchase made this morning”.

Kogan nailed it.

How many times have you walked into a Harvey Norman store looking for an advertised special only to find a quickly typed up and photocopied notice saying that there had been an error on page such and such of the catalogue and the advertised price was incorrect?

The guy has a seriously smart approach to business and keeping the customer happy. I mean how many of his customers are going to sing his praises based on what he did?

I’m guessing it’ll be a lot.

For anyone getting into online sales, you could do worse then looking at how this guy has built his business.