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

Google. Microsoft. Cloud Based Apps. Fight!

So Microsoft is feeling the heat from Google Apps.

Must be the case if Monkey Boy’s Microsofties have decided to go for an all out attack on the Gnomes of Mountain View.

Microsoft recently released a video telling Monkey Boy truths about Google Apps.



Now while I don’t necessarily believe that Google Apps is the greatest thing since Cuban Cigars and Premium Vodka, its not a bad product and it has a pretty good price point story to tell.

The truth is that Office 365 is very expensive, especially in Australia.

Now a friend of mine showed me a couple of emails relating to Office 365 discussions he had with Telstra before he told them to get a grip on reality.

The first, and biggest question was based around the variation in cost between most of the world and Australia. Across the planet the cost, predominantly, equates to USD$24 per user per month, for the plan he was looking at, in Australia its AUD$40.10 per user per month for the same plan.

As I write this the exchange rate is hovering around USD$1=AUD$1.06.

This means that it should be costing around AUD$22.64 per user per month. Its a cloud service, no boxes to move, distributors to take a cut, product to feeight into the country, DVD’s to produce, packaging to manufacture and so on so where’s the price differential?

I mean the data centre that runs Office 365 for Australia is in Singapore and is the same one that is used in Singapore where the cost is $24 per user per month and in the absence of anything else it looks like its priced in the local currency.

So what was the explanation from Telstra for the price variation?

As to pricing differences between AU and US, It is a common practice by all multinationals to have price discrimination based on Geography. If you compare the prices of Petrol, iPods, TVs Big Macs, there is a price discrepancy based on the purchasing power of that that country.

We still believe that purchasing Microsoft Online Services will be more cost effective than on premise software. But also consider this, the Australian currency is the 4th most traded currency. Between July and October 2008 our currency fell from 97c to 61c.

Hmmmmmm…..

So the strongest argument Telstra had was that ‘all multinationals to have price discrimination based on Geography’, unless you live in Singapore, in Russia the price converts to USD$30 per user per month, and that three and a half years ago the Australian dollar fell from 97c to 61c.

Sorry but that’s ancient history.

Here’s the thing AUD$40.10 converts to USD$42.75. So if we use USD$25 per user per month as a base price someone in Australia is levying a massive tax on all Australian businesses to use a product that supposed to help reduce costs.

Lets do the math.

A business of 100 staff in the US will pay $2500 per month or $30000 per year to use the cloud based Office 365.

A business in Australia with 100 staff will pay $4010 per month or $48120 per year to use the same product running on a data centre ‘out there somewhere’.

Convert the annual US price to Australian dollars at todays exchange rate and the price becomes $28122 per year.

So it costs an Australian company $19998.00 per year more to use Office 365 in Australia than it does in the United States for an equivalent number of users.

No wonder Microsoft is taking aim at Google Apps.

The Samsung Big Ass Mobile

So Samsung, and now LG have a phone that comfortably (?) sits in that uncomfortable space between a tablet and a smartphone.

The question for me is why? I mean its too big for comfortable use as a phone, unless your one of the genetically privelidged who can hold a competition basketball comfortably in one hand.

So when you use this phone you’ll look like this…



Not the look you need when you’re trying to look cool with your new smartphone.

This may be a bad omen...

One of Samsung’s staff has come out to say that they are not much concerned with the appearance of an ‘iTV’ from Apple.

Now if I think back to the comments from ‘the industry’ prior to Apple delivering the iPhone they weren’t too different.



Things like, “they don’t understand the market sector’, or, ‘their phone is too expensive’, or, ‘we have better battery life’, and so on.

Now Samsung swings into action with their AV product manager saying that TV sales are driven by picture quality and that Samsung can’t be touched in that respect.

He said “TVs are ultimately about picture quality. Ultimately. How smart they are…great, but lets face it that’s a secondary consideration.”

I dunno, if there’s a TV on the market that lets me access my media content by voice control as well as giving me a consistent interface across my phone, tablet and so on with a good picture quality…I’ll consider it.

Here’s the thing. Go to one of Gerry Harvey’s “yell and sell” palaces and you’ll see a wall full of TV’s and the picture quality varies wildly. In fact you’ll find that the staff adjust brightness and contrast to benefit whatever they’re trying to shift. I’ve seen it.

I’ve had the staff adjust all the setting to be the same on several TV’s I’ve been looking at and found that the nicest suddenly became ‘not so nice’.

I’m not saying that Apple will dominate the market, but, Chris Mosely from Samsung should acquaint himself with the word hubris, just like Monkey Boy did after his comments in the video above.

So NFC is a good idea?

A while back I put up an article about some concerns I have with NFC implementations.

Just the other day there was a big hoo-hah about Google Wallet being hacked on rooted Google Phones. Now it turns out the Gnomes of Mountain View actually left a security hole big enough to drive a truck through.

This piece on Boy Genius Report goes into more detail on the mechanics of the hack.

My problem with this is “what were they thinking”?!

From looking at the video this isn’t the sort of security flaw that’s taken hundreds of hackers millions of lines of brilliantly executed computer code to discover and exploit.

I mean, really, are we supposed to trust our personal and financial security to a bunch of code-monkeys that leave security holes like this in a product?

Makes you really feel safe about that RFID chip in your passport and your credit card too.

This is a technology that requires a whole lot more thinking about.

Halliburton dumps Blackberry

So Halliburton has decided to give their 4000+ Blackberrys the flick for iPhones.

This is not good news for RIM.

They’ve been losing corporate customers at a massive rate and their much vaunted Playbook has just turned out to be just another very expensive paving brick. Just to move stock they’ve had to decimate price and in Australia some carriers are giving away a playbook with every Blackberry activation and they’re still having trouble moving stock.

RIM is a living (?!) example of what I described in an article I wrote for Australian Anthill a long time ago If you don’t change, you will die!

The problem with this company has always been that they thought because they created the smartphone market they knew what everyone wanted. The reality is they didn’t and the market is punishing them for it now.

They took their eye off the ball and it hit them right between the eyes.

More about PC Sales

Just following on from my last entry.

According to this piece in The Register:

Apple was the only major computer maker to increase its shipments into the UK PC market during the final three months of 2011.
The article was quoting figures from Gartner that excluded iPad sales, despite that Apple showed a growth in shipments of 17.2% when comparing Q4 2010 to Q4 2011.

Comparatively HP dropped 27%, Dell dropped 32.2%, Acer lost 62.4% and Toshiba lost 5.4%.

The big question is if this is being driven by:

1. Everyone wants a Mac because Windows is so yesterday.
2. Everyone is waiting for Ultrabooks running Windows.
3. Everyone has decided to skip Windows 7 and wait for Windows 8.

I do know that many training providers for the corporate markets are now offering Mac training on a regular basis so maybe there is a change happening in the market.