Gerry Harvey tells: Why I closed Clive Peeters and why retail’s in trouble

Harvey Norman chairman Gerry Harvey concedes he lost a “hard bloody fight” to keep the Clive Peeters brand alive, but says the community is coming around to his view that more needs to be done to protect the retail sector.

Speaking to SmartCompany after announcing the company would close seven Clive Peeters and Rick Hart stores and convert a further 16 to Harvey Norman stores, Harvey said Clive Peeters was “stuffed” when snapped up from receivership last year for $55 million.

Harvey says he had not counted on the brand being so tainted after one of Australia’s most notorious embezzling cases.

“The name was so badly damaged that their store sales had more than halved,” Harvey says.

“I had a view I could turn that business around.”

“It’s been a hard bloody fight but we’ve lost.”

“We did do our best, but that’s what you do in business, you make the decision.”

Harvey also says he had decided to admit to the Clive Peeters mistake on radio advertisements because it’s an unconventional move.

“People don’t do ads like that,” Harvey says.

“It was my idea, writing an ad. And it’s the truth.”

Harvey also reflected on the criticism he and other retailers including Solomon Lew and Myer attracted late last year for pushing for the GST-free rate to be cut on online purchases of less than $1,000.

“The media decided to attack us, the Government, we were the worst people in the world,” Harvey says.

“Guess what? People are now starting to say, ‘they might have been right.’”

“We’re not silly.”

Harvey says while he doesn’t believe 10% of retailers will close, it could reach near those levels.

“It’s only the beginning of what’s going to happen. The problem is it’s going to accelerate.”

Drawing attention to the number of store collapse and job losses over the past six months, Harvey says retailers are in for a very, very difficult time.

“It’s not just online retailing, the state of the economy, consumer confidence, the media – it’s all of those things,” Harvey says.

“You put them all into a pot and you get a very difficult situation.”

“If you’re in a sporting or clothing shop, you have something to worry about.”

The Clive Peeters franchise collapsed in May 2010, after a Victorian payroll officer stole about $20 million from the company and invested the proceeds in real estate. She was later sentenced to five years in jail.

Clive Peeters, which had taken on debt to expand during the boom years, had 45 stores at the time of its collapse.