Gerry Harvey has reluctantly expanded the company’s online operations into a new website that will sell directly import video games, saying the move is a response to the sheer number of sites offering discounted goods.
“If you can’t beat them, join them,” Harvey said yesterday.
The move comes just weeks after JB Hi-Fi announced a direct import model for camera equipment, and also comes alongside profit downgrades from Billabong and Kathmandu.
“We’re not doing this with a great deal of joy,” Harvey said. “We’ve been able to do this for a long time, but you get to the stage where you can’t hold off anymore.”
Harvey lamented that sales in the lead-up to Christmas were only “OK”.
“The number of retailers that have gone out of business is very high, and they are suffering under some of the worst conditions in 20 years. And we’ve talked about online shopping before, but it’s also consumer confidence in general.”
Both Harvey and company general manager of computers and communications Ben McIntosh said video games “are a good place to start” with direct importing, arguing consumers have been paying for too much for far too long.
“We believe the gaming customer has been paying far too much for gaming software for years, retailers and suppliers have been keeping the price high,” McIntosh said.
The gaming market is worth about $2 billion in Australia and importantly is one of the fastest growing retail segments, according to the recent media outlook report from accounting firm PWC.
But consumers have argued for some time there is a disconnect between overseas and local prices. New games in the United States cost about $US60, while in Australia they regularly run upwards of $US100.
On the new Harvey Norman site, they range from anywhere between $30 to $60, with a delivery charge of $3.95 per item.
Harvey explained that while the site will cannibalise sales from stores, the company’s current market share isn’t significant.
“If people want to buy the games in the store, they can, but they’ll just pay a higher price.”
Forrester Research analyst Steven Noble said the introduction of another direct importing site is a trend that is set to continue.
“The great thing about the internet is that it makes easier than ever to reach intermediate markets and go around these barriers. Ultimately, it’s a good thing for the consumer.”
“This is also a fascinating move in how it reflects a change in tact from the Harvey Norman perspective, which is now basically saying if you can’t beat them, join them.”
Harvey Norman’s Ben McIntosh also said the company hopes to compete first against local bricks and mortar retailers, and then other sites directly importing to Australia, such as OzGameShop.
“This is just the beginning, and there are competitors in every market. But we feel the outfits online are a lot smaller, and we bring a lot of legitimacy to the market.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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