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

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.

Is the Playbook a Deadbook?

I just don’t get RIM’s Playbook…and from the sounds of things neither does anyone else.

On their latest earnings call RIM said they only shipped 200,000 units in the last quarter. They shipped 500,000 in the quarter previous to that. I’m guessing that means that some poor retailer has enough of these things sitting in a warehouse somewhere to pave an awful lot of driveways.

I’d love to see the sell through rates on this one because I’d say that this story Best Buy discounts Playbook has more to it than this story Harvey Norman reports 'fantastic' PlayBook sales.

Of course it depends on your definition of fantastic. I mean if you’ve got 100 units in your warehouse and you sell 75 then they are fantastic sales, if you’ve got 10,000 and you sell 75, well, not so much.

RIM also said that they shipped less Blackberry handsets than they forecast even though they increased the number of subscribers. If you take into account timing on contracts and the slow movement of corporates to other smartphone platforms I’d have to say that Jim Balsille and Mike Lazaridis should start worrying.

What are they going to do when slowing sales at the front end of the pipeline starts translating to reducing subscriber counts at the back end as users start moving to other smartphone platforms?

How is RIM going to turn this around, or, at some time in the future will their decomposing corporate corpse just be a footnote on some other company’s balance sheet?

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.

Retailers have to stop blaming the Internet for eating their homework

Earth to Australian retailers.

People are buying online because your service sucks.
People are buying online because they can compare prices around the world.
People are buying online because they don't want to buy Gerry Harvey another racehorse.
People are buying online because they're sick and tired of limited product choice.

But mainly people are buying online because you're really bad at your job! It has nothing to do with GST this and exchange rate that. Well actually the exchange rate does have something to do with it only because people are getting an idea of how much they're being gouged by the retail and distribution channel.

You screwed it up for yourselves and you can't man up enough to admit it!

Its all about service.

The other day I walked into a Bunnings store. I needed some help and went looking for a staff member...I should have known better. As soon as I made eye contact with one of the "team" members they suddenly found something more interesting to do in another aisle.

By the time I got there they'd disappeared from sight, never to be seen again. Seriously if Australia wants to win gold at the London Olympics in the 100m all we have to do is enter Bunnings staff.

Just walk through your local shopping centre and have a look at the staff working behind the counter, I mean really look at them.

Retailers want to have the lowest cost staff possible, because they've signed up for insane leases that charge the national debt per square metre.

The staff spend more time using their mobile phones, trying on the clothes/shoes/whatever, or, talking about their last big night out. This is usually happening while a customer is waiting at the counter and being made to feel as though their mere presence is an affront to the staff who are discussing/texting/trying on far more important things.

You are the architects of your own downfall.

Another good example of this was a sad and painful visit to a Harvey Norman store. The staff didn't want to know about me. They walked around looking very important, ignoring all the customers. That all changed once a customer picked up an expensive item - all of a sudden it was another Olympic class event as they all tried to write up the sale.

I had to wander the store like a lost bedouin in the desert until I finally found what I was looking for and then I was swamped by sales staff like the winner of a marathon all clamouring to write up my purchase.

If you're going to provide me a retail experience that has no benefit over an online experience why the hell should I drive to the shopping centre and struggle for parking and service when I can sit at home and buy online.

Every retailer on Pitt Street Mall salivates at the crowds waiting to get into Zara, but I don't think one of them actually looks at why they are lining up to get in.

There's choice, something that you can't find somewhere else. The service is pretty good. The prices are reasonable for the quality you are getting.

There's a clue there for somebody if they'd just take a second to realise they don't know all there is to know about retail.

Now everyone in Australian retail has decided that they'll get into 'online' because that's the future and they're going to screw that up as well because 'online' has to deliver a quality experience for the customer.

Unfortunately it seems to be ingrained in Australian retail that the customer only exists to keep the retailer in racehorses.