Harvey Norman opens flagship store in the UK
Gerry Harvey and Katie Page are confident their first UK store will be a success despite Britain’s economic challenges, because they offer a different retail experience to others in the market.
Gerry Harvey and Katie Page are as dynamic as they are resilient. At a time when broken Britain is paralysed ahead of a feared business and wealth-crushing budget, the retail power couple have just opened their first store in England.
The new flagship Harvey Norman was launched on Thursday in the vast Merry Hill complex, 30 km outside of Birmingham, with suppliers arriving from across the world to celebrate.
This first store in England takes up the space previously occupied by Debenhams, a huge department conglomerate at one stage worth A$3bn which had ridden through the Great Depression in its 243 year history – the first shop was opened in 1788 – but couldn’t compete with the rising energy costs, spending downturn during Brexit and the Covid-19 pandemic.
So what can Harvey Norman do that Debenhams – overstretched with debt having sold off a chunk of its real estate several decades ago – couldn’t?
For this is the nation derided by Napoleon in 1794 as a nation of shopkeepers which built its fortunes on trade and commerce.
Enthusiastic suppliers who attended the launch talk about the yawning gap in the UK market for customer service, and Harvey Norman executives have impressed them with the time spent training staff to know the products intimately, and offer shoppers an experience in a beautifully presented showroom. The offerings are at various price points – from good quality to the best.
Sandra Duncan, European training chief for the coffee machine manufacturer Sage, a company which supplies to other UK retailers as well as the new Harvey Norman store was confident Harvey Norman would quickly succeed in Britain because they offer a different retail experience to others in the market.
“In the UK retail world there is nothing like Harvey Norman, the way they set up the stores,’’ she said.
“But for me the big point of difference is the way they train their staff. They invest, train and retrain and the staff are very interested in what they sell. So when people come in they know they can ask questions and they are getting knowledgeable responses. The customers here can’t believe it and word of mouth is already spreading quickly.”
The obvious choice for the Australian retail giant might have been to target south west of England, where incomes and aspirations are high. Yet the portents for success came together here in this area of the Midlands in a complex which sees 18 million people visit each year from within a 90 minute drive.
Mr Harvey has done the maths and believes conservatively that’s more than 300,000 regular returning visitors, or three times the formula used for store locations in Australia.
But it won’t be without its challenges as the Harvey Norman brand is largely unknown in these parts and the testing of the British market comes during a particularly delicate time in the country’s economic challenge.
The duo plan to open three stores in this region as a forerunner to expanding, perhaps up to 50 stores across the rest of the country to reach 70 million people.
Yet next week the Keir Starmer government is raising taxes to plug a A$44 billion black hole, and while “working people” are to be exempt in the October 30 budget, business taxes, capital gains and inheritance taxes are foreshadowed for big increases.
After making an initial big play on pensioners, removing the winter fuel allowance as their first hugely unpopular decision, the Labour leaders in their first three months in office have fuelled widespread national anxiety and households have paused their spending. S & P global market economist Chris Williamson said the gloomy rhetoric has dampened business confidence and spending across the board.
Ms Page shrugs it off. “We’ve seen it all. Retail is cyclical. You are never going to pick the absolute right time, but we have been through the financial crisis over here, but in Ireland and Europe we really went through it. If your product is right and offering is right you pick up that market share’’.
Mr Harvey was confident that Britons will still spend: “if we sell 100 fridges in the whole of the UK last year, then this year we might only sell 99, or we might sell 101’’ he said.
“The market is there.
“Everyone needs a fridge a washing machine, they want their tech, it doesn’t matter what sort of downturn, they love tech.’’
The British market had been a Harvey Norman goal for the past two decades but the 2008 global financial crisis, which decimated Europe amid plummeting consumer confidence, came just as they had expanded across Ireland and it put further expansion on hold. Mr Harvey says the losses back then were mounting and frightening: $50m one year, $50m the next and the two after. “We lost $200m in four years, but now we are the leading retailer in Ireland, we are the number one for market share in electrical.’’
He adds: “If Australia had been hit to the same extent we would not be here’’. Unlike competitors which let staff go, Harvey Norman held on tight and rode the storm. Now with 16 stores across Ireland and Northern Ireland, the group earlier this month announced six straight years of profitability with revenue hitting €424.07m and pre tax profits of €13.1m in the 12 months to the end of June 2023.
Mr Harvey notes that crucial to the British expansion are existing suppliers and strong logistics, building on the success of Ireland.
Mr Harvey noted: “We are 15 years behind where we wanted to be, but if we can pull this off and have 50 stores in the UK we would dwarf anything we have done in Australia. Maybe we will run away hurt, but we are confident. When suppliers walk in here, they go ‘oh wow, we are glad you have invested in you’. All our suppliers have invested in us and the big feedback is from people walking in ‘we have needed you here’.’’
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