Harvey Norman

Harvey Norman Holdings Limited

Type	Public (ASX: HVN)
Industry	Retail: Computer, Electrical, Furniture and Bedding goods
Founded	Auburn, New South Wales (October 1982 (age 34) )
Founder	Gerry Harvey Ian Norman
Headquarters	Homebush West, New South Wales, Australia
Number of locations	194 (Australian, franchised) 86 (overseas, company owned)
Key people	Gerry Harvey, Chairman/Co-Founder Ian Norman, Co-Founder John Slack-Smith, Chief Operating Officer Katie Page, Managing Director Chris Mentis, Chief Financial Officer
Revenue	A$5.3 billion (Australia) (2016)
Operating income	A$523 million (2016)
Net income	A$349 million (2016)
Number of employees	Est. 10,000 (Australia Only) 407 (Homebush West Headquarters) (29 September 2006)
Website	www.harveynorman.com.au (AU) www.harveynorman.co.nz (NZ)
Footnotes / references [1]

Harvey Norman is a large Australian-based, multi-national retailer of furniture, bedding, computers, communications and consumer electrical products. It mainly operates as a franchise^[2](except stores outside Australia), with the main brand and all company-operated stores owned by ASX-listed Harvey Norman Holdings Limited.^[3] As of 2016, there are 280 company-owned and franchised stores in Australia,^[4] New Zealand, Europe and South-East Asia operating under the Harvey Norman, Domayne and Joyce Mayne brands in Australia, and under the Harvey Norman brand overseas.^[5]

History

Gerry Harvey and Ian Norman opened their first store in 1961, which specialised in electrical goods and appliances.^[6] Harvey and Norman had first met when both were working as door-to-door vacuum cleaner salesmen.^[6] The store's success prompted Harvey and Norman to expand the business and conduct talks with retailer Keith Lord, who sought to expand his own retail group. They could not settle on a name for the new business, with Harvey and Lord reluctant to take on the other's name. They eventually decided to retain Norman's name and that of its first store manager, Peter Ross. This spawned the retail chain Norman Ross.^[7]

Norman Ross became one of the largest appliance retail chains and by 1979 controlled 42 stores with sales exceeding A$240 million.^[6][8] In the early 1980s, Alan Bond and Grace Bros. sought to acquire the chain, spawning a bidding war that saw Grace Bros incorporate the chain in 1982. Three weeks later however, a determined Alan Bond successfully convinced the Grace Bros. director Michael Grace to sell the chain to Bond. Shortly after, Harvey and Norman were given notice and redundancy package of six months pay. Reasons for their sacking were not publicised, although Harvey later told The Daily Telegraph:

Norman Ross later went into liquidation in 1992.^[9] In October 1982, Harvey and Norman purchased a new shopping centre in outer Sydney suburb Auburn for A$3 million, and opened the first Harvey Norman store. The enterprise was intended to be a single store but its success led to the opening of others. Harvey Norman Holdings Limited was listed on the Australian stock market on 3 September 1987.

In the early 1990s, Harvey Norman adopted the superstore format then successful in the United States and entered the computer and furniture markets. The first computer superstore was opened at Bennetts Green, Newcastle in late 1993 with much fanfare. This was later followed by the opening several weeks later with a larger superstore at Auburn (Sydney, NSW). Many stores later expanded their computer sections. Much support was provided by distributors such as Merisel, Dataflow, Tech Pacific, and Marketing Results. Extra support and funding was supplied by vendors (supplied by these distributors) such as Microsoft, Corel, Symantec, WordPerfect, etc. Staff also received weekly training from companies on a constant basis in order to provide better product knowledge (than similar larger retailers). Harvey Norman also sold Apple Computer products for several years, until Apple decided in the late 1990s to no longer supply Harvey Norman. Apple returned in 2004 with the iPod range, which later expanded into iPads, iPhones, iMacs etc. The launch of Windows 95 was a huge success with a few Sydney stores opening at midnight. This came with a bonus pack. Some regional areas opened at 6 AM. This was also the realisation that the CD was taking over. Demand for the CD version was under-estimated. The bonus back featured Harvard Graphics on CD, as well as an introductory Internet offer from OzEmail.

A Norman Ross store was opened at Bennetts Green in 1995, with the purpose of being a clearance centre. This had mixed results, and was closed within 12 months. This however paved the way for the Bennetts Green store to expand into larger premises in 1996, where the store operates today. Part of the relocation was a dedicated educational centre, named Kidscape. Specialist employees were employed from Dataflow, to provide advice to parents on which software was best for their child. Kidscape was installed at a number of stores; however, it was disbanded at a number of stores, within two years.

A number of stores also opened early for the Windows 98 launch. This included a number of offers (including an SPC CD with Harvard Graphics, Quicken etc.). Other products were promoted at $98, such as modems, printers etc.

Harvey Norman has relied on 'bricks & mortar' as its strength. When suppliers (such as Compaq and IBM) started supplying direct, Harvey Norman stopped selling those products in-store. After Compaq later stopped selling direct, Harvey Norman returned to selling Compaq PC products.

Harvey Norman growth came organically until it acquired Joyce Mayne in 1998. A number of electrical stores in Western Australia, some of which were owned by Wesfarmers, were purchased. Further acquisitions followed and by 2000 the chain had 100 stores. In 2006, Retravision was struggling, and a number of Retravision stores were acquired by Harvey Norman. These were later converted to either Harvey Norman or Joyce Mayne stores. The stores that were not successful were closed down. ^[10]

A Harvey Norman superstore in Wagga Wagga, New South Wales

Company structure

Harvey Norman's operating structure is unusual in that each store department (bedding, furniture, computer and electrical) is operated by a separate entity of management. Thus many superstores are a combination of three or four separate businesses managed independently contributing revenue to Harvey Norman Holdings Ltd. through lease payments and a portion of sales.^[11] Overseas, Harvey Norman stores are directly owned and operated by the ASX-listed, Sydney-based parent company, Harvey Norman Holdings Limited. However, sales commissions are still heavily used across all departments of the store to motivate salespeople, drive sales and improve service.

Retail marketing consultant Kevin Moore argues that this 'high reward-based remuneration structure' drives Harvey Norman's point of difference and is what contributes, at least partly, to its retail dominance. "Almost all the people in a Harvey Norman are there because they are great salespeople, can propose solutions for customers and are paid in line with what they sell... So when you walk into a Harvey Norman, the guys on the floor have a real reason to help you. You walk away happy at the end of the day having spent money with them. And so do the staff because some of the money you left in the store goes to them... for helping you solve a problem in your life." ^[11]

Harvey Norman

Harvey Norman is the flagship brand of Harvey Norman Holdings Pty Ltd. Harvey Norman is mainly a household goods retailer - with items being sold in their stores including major appliances, small appliances, information technology (such as computers, printers and mobile phones), furniture and bedding among other things. There are 166 Harvey Norman franchised complexes in Australia, as at the 30th of June 2015, with separate franchisees owning and operating separate departments. New South Wales is the state with the most Harvey Norman stores (57), followed by Victoria (38), Queensland (36), Western Australia (19), South Australia (10), Tasmania (6), Northern Territory (2) and the Australian Capital Territory (1).

Harvey Norman in the Queen Street Mall, Brisbane

Home renovations

Harvey Norman Design and Renovations is a subsidiary of Harvey Norman Holdings Limited. The design and renovations arm of the company specialises in bathroom, kitchen, wardrobe, home office, bars and home theatre renovations, and featured showroom franchises in Victoria, South Australia and New South Wales. The Victorian and South Australian outlets have since closed, leaving 5 New South Wales outlets in operation.

Domayne

Domayne is a furniture, bedding and homewares chain independently operated by franchisees (and whose brand is owned by Harvey Norman Holdings Ltd). They focus on 'fashion and design' in their furniture range, with a hallmark of theirs being their range of 'contemporary', Australian-made furniture. While their focus is on furniture and bedding, certain outlets (such as former Joyce Mayne stores) also stock electrical goods and computers as well as higher-end cooking appliances.^[12][13] As of the 9th of June 2016, there are 19 Domayne franchised complexes Australia-wide, with 12 in New South Wales, 3 in Queensland, 2 in Victoria, 1 in the Australian Capital Territory and 1 in Western Australia.

Joyce Mayne

Joyce Mayne (slogan: Where the smart money shops) is a retail chain offering similar products to Harvey Norman. They mainly offer whitegoods, small appliances, stationery and IT products (such as mobile phones, computers and printers).^[14] There are 6 Joyce Mayne stores left in Australia as of the 9th of June 2016 - 4 in Queensland (Maroochydore, Chancellor Park, Toowoomba and Townsville) and 2 in New South Wales (Nowra and Warrawong).

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 as a result of the acquisition of former Megamart and Retravision stores, has access to well-placed potential sites on which to open Officeworks-sized outlets.^[15] In December 2007, Harvey Norman announced it would be opening its first two OFIS stores in Albury and the Sydney suburb of Auburn in March 2008. They aimed to have 100 stores within ten years.^[16] In all, five OFIS outlets were established, but proved unprofitable and in February 2009 Harvey Norman stated it would close all of the stores by June 2009 and abandon the concept.^[17]

The School Locker

School Locker is aimed at primary and high school students, selling school uniforms, stationary as well as sports and musical equipment. There is 2 big box style retail stores in NSW and 4 in Queensland in addition to a dozen School Campus Stores. ^[18]

BiG BUYS

There are five BiG BUYS stores in Australia, located in Springvale, VIC, Cambridge, TAS, Munno Para, SA, Auburn, NSW and Maroochydore, QLD. They sell some of Harvey Norman's range, plus music instruments, camping gear, luggage, pet and baby products. BiG BUYS also has an online store via the Harvey Norman website.^[19]

International

Harvey Norman store at Millenia Walk Singapore

As of the 30th of June 2015, Harvey Norman Holdings' overseas operations (all conducted under the Harvey Norman brand) are in^[5]

• Ireland (12 stores)
• Malaysia (13 stores)
• New Zealand (36 stores)
• Northern Ireland (2 stores)
• Singapore (17 stores)
• Slovenia (5 stores)
• Croatia (1 store)

Excepting Malaysia and Singapore, all overseas operations are directly owned and operated by Harvey Norman Holdings Ltd. or its associated companies.

The Harvey Norman stores in Malaysia and Singapore are ultimately owned and operated by a Singaporean company, Pertama Holdings Limited. Harvey Norman Holdings Ltd. and its associated companies effectively own 80.2% of the company, with a Singaporean sporting goods and fashion distributor, Ossia International, holding 19.8%.^[20] Formerly listed on the Singapore Exchange (SGX), on July 8, 2013, it was finally delisted after the proportion of shares in free float fell below 10%. Under the former ownership structure, as of July 2013 Harvey Norman Singapore (a wholly owned subsidiary of ASX-listed Harvey Norman Holdings Ltd.) and Harvey Norman Ossia (Asia) Ltd. - a 60/40 joint-venture with Ossia International - had held over 83% of Pertama's shares.^[21]

The 86 company-owned overseas stores of Harvey Norman contributed around 10%, or AU$36.5 million, of the parent company's AU$378 million profit in the financial year ended 30 June 2015 - an increase of 32% from the previous financial year. This excludes the financial impact of the overseas property Harvey Norman owns for its stores. New Zealand operations were the only one to have recorded a rise in profit over the last financial year (from AU$49.75 million to AU$53.11 million), with operations in Slovenia and Croatia posting a small profit decline (from AU$3.02 million to AU$2.70 million) and all other overseas operations recording losses.^[5]

Norman Ross

Harvey Norman Holdings Ltd previously operated Norman Ross stores in New Zealand. The first store opened on 4 December 2007 in Lower Hutt. All Norman Ross stores were rebranded as Harvey Norman in February 2013.^[22]

Online store

On 22 December 2011, Harvey Norman launched Harvey Norman Direct Import based in Ireland to ship games to buyers in Australia.^[23] The prices for video games are cheaper than the Australia-based online store of Harvey Norman.^[24]

Controversies and criticism

• In 1995, the ACCC acted 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 describing features that it did not, in fact, actually have.^[25]
• In 2000, before the Australian implementation of the Goods and Services Tax, the ACCC alleged that Harvey Norman advertised Quicken QuickBooks for $199 with bonus software valued at more than $900 while aware that the quantities of bonus software were insufficient to meet consumer demand. Harvey Norman was also alleged to have misled consumers regarding tax benefits associated with the purchase of Quicken Quickbooks and digital cameras.^[26]
• In November 2008, the company's chief executive, Gerry Harvey, was heavily criticised for comparing Ireland's economic problems with the Irish potato famine,^{[27][28][29][30][31]} an event which saw the deaths of over a million people. Harvey has since refused to apologise, admonishing the Irish for their poor sense of humour and stating: "It doesn’t say much about a people when they can’t take something like that on the chin and get on with it."^[32]
• On 8 October 2011, four environmentalist activists illegally climbed the Sydney Opera House and spread out a banner over one of the sails, reading "No Harvey Norman No! Stop selling Aussie forest destruction" as part of a protest against the retailer's profiting from environmental damage. A spokesperson for the protesters said in an interview the "profiting from the destruction of our spectacular forests is absolutely unacceptable". Harvey Norman had previously mentioned they were being "unfairly targeted" and were trying "their best" to sell products from sustainable timber. The protesters were arrested shortly after the event.^[33] In response, the Furniture Industry Association of Australia said that, "Get Up! are effectively campaigning for rainforest destruction in other countries instead of sustainably harvested Australian timber".^[34] David Penberthy writing in The Punch said, "there have been a lot of dumb campaigns launched over the years but this one is hands down the stupidest thing I have ever seen."^[35] The Minister for Manufacturing, Kim Carr has said, "the GetUp! 'No Harvey No' campaign runs the risk of deterring people from buying Australian-made furniture and supporting Australian jobs".^[34]
• In December 2011, Harvey Norman was fined AU$1.25mil by the Federal Court of Australia for misleading advertising relating to their promotion of 3D Televisions to watch the NRL and AFL Grand Finals in areas which could not receive 3D signals.^[36]
• In 2011 the outspoken founder of Harvey Norman, Gerry Harvey fronted a sustained media campaign and funded a special interest lobby group, the Fair Imports Alliance. By late December apparently in a volte-face, Harvey Norman launched a gaming website that leveraged its Irish subsidiary to export video games direct to customers and therefore was outside of the jurisdiction of Australian tax laws for the purposes of GST. Concerns were raised earlier in the year about the prospect of retailers conducting business in such a manner.^[37]
• On Thursday the 1st of October 2015, the New Zealand online store offered dirt-cheap furniture deals between midnight and 8 am. Subsequently, the store decided not to honour the sales stating the prices were the result of a "genuine error", leaving a number of disgruntled customers and potentially a damaged brand name. ^[38]

Relationship with Flexirent

Flexirent has had very close ties to Harvey Norman since 1995 and is heavily marketed in stores. Flexirent is alleged to have strong elements of predatory lending practices.^[39][40]

In addition, Gerry Harvey has himself asserted on primetime Australian television in a January 2008 airing of Today Tonight that Flexirent should be turned down by the average family. This is why Harvey Norman promotes the product to its commercial customer base.^[41]

Sponsorship

Harvey Norman's major sponsorships include

• The Melbourne Storm, the North Queensland Cowboys and the Cronulla Sharks in the National Rugby League.
• The Richmond Tigers in the Australian Football League.
• National Rugby League State of Origin series.

Sponsorship of Rugby League dates back to the ARL competition in 1997.

See also

• Free Access Magazine

References

External links

• Harvey Norman Australia
• Harvey Norman New Zealand
• Harvey Norman Ireland
• Harvey Norman Northern Ireland
• Harvey Norman Slovenia
• Harvey Norman Singapore
• Harvey Norman Malaysia
• Harvey Norman Croatia
• Harvey Norman Big Buys