Is Gerry Harvey the most deluded man in Australia?

Comments recently from ‘Outspoken retail billionaire’ Gerry Harvey seem to pour water on the burning hot idea that shopping behemoth Amazon, fresh from their $13.7billion deal to buy Whole Foods, will be arriving in Australia any time soon.

Harvey, commented that "Amazon to my knowledge haven't even bought a block of land in Australia." This suggests that not only does he not fear the company that makes up 5% of ALL (not just online, all) retail sales in the US, but that somehow he’s managed to build a network of commercial real estate agents feeding him info across the country who would appear to be willing to ignore any non-disclosure agreements they might have signed.

And with 194 stores across the country, you can’t help feeling that Gerry Harvey should know what he’s talking about. After all, the fact that Harvey Norman was recently the 19th most shorted stock in Australia, that ASIC are probing their accounts, that Gerry has recommended the Australian government block Amazon’s entry into the country and that overseas, two major retailers in the US (Macys & JC Penny) lost almost 20% of their share price in May are probably just incidentals, right?

Retail upheaval in Australia? What retail upheaval?

Let’s take a moment to think about tumble dryers. About four years ago, I went shopping for a tumble dryer and I went to Harvey Norman. Once I made my way past the perpetual bargain bins of low cost upsell items at the entrance, past the sorrowful selection of vacuum cleaners (why is so hard to make an appealing display of vacuum cleaners?) and into the white goods department, I was jumped on (not literally, figuratively) by a salesman. And to his credit - and Harvey Norman’s product training ethos - he knew what he was talking about when it came to tumble dryers.

The conversation was quick.

“Which tumble dryer would you recommend?”

“This one,” he replies, pointing at the one in the middle of a line of near-identical white boxes.

“Why?”

“It’s just the best by far. Better than any of the others.”

“So why do you bother stocking the others?” I asked.

He shrugged. I thanked him and told him I’d think about it, went home and bought it from Appliances Online.

Gerry Harvey is a modern day King Canute. Except this time we’re not talking about the unstoppable tides of the ocean but a company with a market capital of $356 billion, a leader with the vision of (and probably beyond) a Jobs, Gates or Musk and a business that apparently spends over $3billion a year on producing video content. I mean that’s more spent on just making video content than Harvey Norman made in total revenue in the same year.

 Historically, Harvey has taken the famous McDonald’s route to market; the stores are just a part of the revenue for the company whilst the property ownership makes up a chunk of the companies worth. And no doubt, that property portfolio and the expansion overseas will prop up many of issues that Amazon can throw at Harvey Norman. But when it comes, it’ll hurt everyone, one way or another. And it’s worth remembering that perpetual discounting doesn’t breed loyalty. As anyone who has read Simon Sinek’s masterpiece ‘Start With The Why’ would know, there’s probably not a single one of the 23 million Australians out there who would claim they would ‘only ever buy from Harvey Norman’.  

I’m not a retail billionaire. I’m not any sort of billionaire. But I can see a change coming and I can understand the implications of that change. Uber vs. Taxis. Netflix vs. Channel Ten. Streaming vs. Blockbuster. It’s happened before and over the next 7-year cycle of Silicon Valley we’re going to see the death of car dealerships, electricity companies, car parks and (hopefully) established political paradigms. We may even start to herald in the death of the 38-hour working week whilst we talk to our own personal AI helper.

Maybe it’s just all a matter of perspective? I mean after I bought my last mattress from Koala, my duvet and pillow covers from Sheridan’s store and my lounge lamp from a specialist lighting store in Melbourne - all of those outlets online - who can argue with a man who brought us this gem: 

“There is no internet business in furniture or bedding. Zero - practically in the world.”