HARVEY NORMAN

'Harvey Norman' is a large retailer of electrical, computer, furniture and bedding goods based in Australia.
It is effectively a franchise and the main brand owned by Harvey Norman Holdings Ltd. Currently there are more than 160 Harvey Norman stores in Australia, New Zealand, Slovenia, Republic of Ireland, Malaysia and Singapore.
Harvey Norman Holdings Ltd control other prominent Australian retail chains such as Domayne, Space Furniture, Ariston Appliances and Joyce Mayne.^[1]

Contents

History

Company structure

Sales environment

Controversy

Move into stationery

References

External links

History

The very first Harvey Norman store was officially started by business partners Gerry Harvey and Ian Norman in 1961. The original store specialized in electrical goods and appliances and experienced immediate success prompting Harvey and Norman to seek expansion of the business. The pair conducted talks with fellow retailer Keith Lord who sought to expand his own retail group however there was disagreement as to what the new business would be called. Both Harvey and Lord were reluctant to take on the others name but it was eventually decided that the new retail chain would retain Norman's name and the name of the new company's first appointed store manager Peter Ross. This spawned the successful Australian retail chain Norman Ross that would be prominent from 1962 to 1988. ^[3]
Norman Ross grew to become one of the largest appliance retail chains in Australian and as of 1979 controlled a total of 42 stores and posted sales of more than $AU 240 million. In the early 1980s Alan Bond and Grace Bros. sought to acquire the chain spawning a bidding war that would see Grace Bros incorporate the chain in 1982. 3 weeks later however, a determined Alan Bond successfully convinced the current Grace Bros. director Michael Grace to sell him the chain. Shortly after the sale Harvey and Norman were given notice and redundancy package of six months pay. Reasons for the sacking of the two was not publicized, however in an interview with the daily telegraph Gerry Harvey was quoted:

''"I said I wished Bond would pack up his marbles and go back to Perth. Then I got a telegram telling me I was sacked."''^[4]

The pair continued in retail purchasing a new shopping centre in Auburn; an outer suburb of Sydney for $AU 3 million thus beginning the first of the successful Harvey Norman chain stores. It was originally intended to be only a single store however its now well known discount formula proved to be greatly successful and a number of other stores soon opened. Eventually this resulted in its public offering and official listing on the stock market as Harvey Norman Holdings Ltd. on September 3, 1987.
In the early 1990s the Harvey Norman adopted the superstore structure that at the time was experiencing success in the United States. During the 1990s it would successfully enter the computer and furniture markets. Harvey Norman growth came organically until its first acquisition of Joyce Mayne in 1998. From then on a number of acquisitions were made and in 2000 the chain had incorporated its 100th store. The high profile company continues to expand both locally and overseas and is now seen as a competitor to Australia's largest retail chains such as Coles, Woolworths, Myer and David Jones.^[5]

Company structure

Harvey Norman is unusual it its operating structure insofar that each separate store is operated by a franchisee whom is responsible for their own department, be it furniture, computer or electrical. For these reasons, many superstores are in fact a culmination of 3 separate businesses. Each franchisee contributes revenue to Harvey Norman Holdings Ltd through lease of the property and a portion of sales.
Harvey Norman advocates that this allows the company to better integrate with communities in that the store owners and operators are prominent members themselves of the community. The store is also able to contribute to the local community by contracting local business in maintenance, advertising and transport requirements.
It is this unique corporate structure that can cause disgruntlement in customers unfamiliar with it. For example, an employee in the computer department is generally not permitted to assist customers in the furniture and electrical departments and will generally refuse service to customers. Camcorders and digital cameras are a common source of customer frustration as they are often displayed in the same cabinet. The issue is that camcorders fall under the electrical category whereas digital cameras are a part of the computer section.
Customers also purchasing large items in more than one department are also often disgruntled when it is pointed out that purchases need to be processed by each department. ^[6]

Sales environment

Harvey Norman is reputed to be a high pressure sales environment. This reputation has been established primarily because the main source of employee's income will generally stem from a 10% of profit commission that is generally given to all full-time staff and some experienced casual and part-time employees. In addition, salesmen are often given incentives to sell particular products through promotions by particular manufactures, through managers incentives to clear aged stock or by product that have particularly high profit margin.
Salesmen have their sales consistently scrutinized by management for potential improvements and possible misconduct. Total profit, gross profit margin, discount percentage, extended warranty hit rates and add-ons are all analyzed in depth and ranked by salesman. These lists are often posted in prominent staff areas. They are very important in the Harvey Norman sales culture and salesman consistently seek to improve their scores through pride and/or competition.
Sales are generally approached from a cost profit margin perspective. Since discounts directly reduce profit margins, salesman are generally extremely cautious to secure a sale with the lowest possible discount as this eats directly into their own commission. Pushing high margin add ons such as extended warranty and accessories is also commonly practiced to increase profit margin.

Controversy

Harvey Norman has been affiliated with a number of controversies in recent times.

★ In 2000 before the Australian implementation of the Goods and Services Tax Harvey Norman was alleged by the ACCC to have advertised nationally Quicken Quickbooks for $199 with bonus software valued at more than $900 when parties were aware that the quantities of bonus software were insufficient to meet consumer demand. Harvey Norman was also alleged to have misled consumers in their catalogue as to tax benefits associated with the purchase of Quicken Quickbooks and digital cameras before the introduction of the GST. ^[7]

★ Harvey Norman have commonly come under fire for distributing knowingly catalogues with unacceptable amounts of errors. In 1995 the ACCC took action against Harvey Norman for knowingly distributing a catalogue which included more than 20 errors. These included illustrations of sale items with incorrect accessories or functions and packages describe to have features that it did not, in fact, actually have. Other errors such as incorrect illustrations and pricing are generally rather prevalent in Harvey Norman catalogues. ^[8]

★ Harvey Norman on the basis of poor trading terms ending their dealing with Nintendo after the poor performance of the Nintendo GameCube. The incredible success of the Wii console however saw Harvey Norman seek to amend the relationship. Nintendo have claimed that negotiations did not take place, in fact Nintendo Public Relations Manager, Vispi Bhopti was quoted as saying;

''"They are telling the market that we are in discussions with them but this is not true. We don't like their terms or the way they operate and we are refusing to do business with them".''

He added;

''"We are dealing with most mass retailers with the exception of Harvey Norman. Their terms are ridiculous. The Nintendo Wii is set to be a hot product going into the peak Xmas buying period so why should we give away margin to Harvey Norman. We are confident that the new Nintendo gaming console will drive sales during the peak buying period that is coming up".''

Harvey Norman, despite its prominence in the Australian games market continues not to sell Nintendo products. ^[9]

Move into stationery

In August 2007, market analysts suggested Harvey Norman would launch a rival "big-box" stationery and office supplies competitor to Officeworks before June 2008. Harvey Norman has registered the brand name "Ofis" and resulting from acquisition of former Megamart and Retravision stores had access to well-placed potential sites on which to open Officeworks-sized outlets.^[10]

References

1. Harvey Norman Corporate Profile
2. Harvey Norman Corporate Profile
3. Answers.com Harvey Norman Holdings Ltd.
4. Answers.com Harvey Norman Holdings Ltd. - Corporate History
5. Official Company Profile - History
6. Official Company Profile - Structure
7. ACCC institutes against Harvey Norman Holdings Pty Ltd.
8. Harvey Norman undertakings after catalogue advertising errors
9. Harvey Norman bully Nintendo, Nintendo bite back
10. Harvey will get into stationery

External links

★ Official Harvey Norman Website

★ Extensive Harvey Norman History by Answers.com

★ Official Harvey Norman Digital Download Store