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Why Windows 8 Is Make Or Break For Harvey Norman

Harvey Norman has a problem. I think you’ll agree that the general perception of one of the nation’s oldest home grown retailers isn’t great. You might be surprised to know that Gerry Harvey himself actually recognises this. He knows full well that his stores aren’t front of mind when it comes to tech. 50 years on from the birth of Harvey Norman, and the commander has decided it’s time to change strategies. This is how Harvey Norman is going to make you like it again.

50 years is a long time to be doing anything. For Gerry Harvey, he’s been surfing waves of retail success for most of that time. Only in the last five years or so have those waves come crashing down on him and his stores. Profits are down by comically huge amounts, ridiculous public campaigns against online retail and higher than usual prices have made Harvey Norman one of the last stores you’d think of to get a new gadget.

Ben McIntosh knows as well as Gerry that there’s a problem. Ben is the company’s head of computing, and has been for years now. He’s in charge of buying, positioning and selling the company’s latest and greatest laptops, desktops and tablets, not to mention he’s one of Gerry’s field generals.

The consummate professional, Ben was suited to the nines on the night of the Windows 8 launch, and I pulled him aside for what I found to be one of the frankest chats I’ve had since Gerry Harvey told me he “doesn’t want to talk about f**king online” to us “f**cking journos” around 12 months ago.

The late hour of my chat with Ben was spurred by the midnight launch of Windows 8 that was minutes away from taking place as we spoke. Ben told me that this is the time, the moment that he has chosen to turn the rubbish public perception of Harvey Norman around. With a launch that includes 56 new devices over four weeks, it’s not a bad move.

Part of Harvey Norman’s problem, Ben told me, is the staff and the customer experience. People walk out of stores now none the wiser than when they went in. Education and communication lines between customers and staff are down, and Ben is working hard to turn it around:

I see Windows 8 as an opportunity to reboot the public perception of our technology business. As Gerry said before, there is a perception that we have bad service, we don’t know what we’re talking about, et cetera.

I have personally invested time and we have sent 350 of our staff away for a week — that’s a lot of their time. We sent them up to the Gold Coast to become certified as Windows 8 specialists with Microsoft. We negotiated with Microsoft to bring out executives and experts from the [United] States to do it and we paid for all of it. We then sent all of our store franchisees to a two-day cut-down version of that. We want to make sure that when a customer gets Windows 8, we know what we’re talking about. If they buy something after that, that’s ok, but if they get [extra] knowledge from Harvey Norman, I’m very proud of that.

So with the little money Harvey Norman does have left in the war chest, Ben is using to fight a war on the knowledge front. Knowledge certainly is power, and he hopes that his staff can impart as much of it onto customers to make the stores relevant again, stopping the slow bleed to online retail that Harvey Norman is currently suffering.

The second half of the problem Harvey Norman faces is price. In an increasingly cash-strapped retail environment, Harvey Norman needs to stay above water while still trying to offer value. This one, I think is a gamble: Ben says that the company won’t try and compete on price with other retailers, simply because it can’t. Instead, it’s going to compete on customer service and product how-tos:

It’s not illegal to make a profit, and if you don’t make a profit, you’re not in business. If you look at our financial results though, you’ll find that [the perception that we protect our high margins] is not always right.

What I can guarantee is that I can ensure customers will always get the best value in a Harvey Norman store. Despite this promise, I cannot promise to offer the cheapest product on the market. I can’t do that. I have to pay for the stores, the lighting, the staff, the training, and if you pay for quality staff, you’re making an investment.

I can’t be the cheapest on the market, but what I can do is use my buying power to pass on the best value to franchisees and customers. For example, all of our competitive pricing…includes free technical support from an Australian call centre specifically through Harvey Norman [with any new Windows 8 device]. That’s not going to be a sales opportunity, that’s purely for service.

All we’ve seen out of Windows 8 coverage in the mainstream media over the last nine months is the fact that it’s going to be a huge step-change in the way people use their computers. That means not a lot of Harvey’s core buying audience are going to upgrade straight away, but when they do eventually buy a new computer, the store will have their back in the education process. Windows 8 is a great time to launch such a service.

Ben wants another 50 years of Harvey Norman. Everyone does. Right now the company is at a cross-roads: does it take its winnings and push back from the table, or does it push back on an environment it’s still trying to grapple with. All I know is that we’re now taking it one year at a time, rather than a decade at a time.

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