Discounts are sending retailers broke, says Gerry Harvey
Lema Samandar – AAP
Gerry Harvey, CEO of Harvey Norman, who started his career as adoor-to-door vacuum salesman. Picture: Stephen Cooper Source: Herald Sun
INCREASED discounting of goods in the retail sector is sending some retailers broke, Harvey Norman chairman Gerry Harvey says.
Despite posting a favourable first half profit result, Mr Harvey said his Harvey Norman electrical and furnishing goods stores and its rivals were struggling under the pressure.
“Our shops are busy and there’s a lot of activity but it’s hard to get the dollars because of price reductions,” Mr Harvey said.
“There’s a lot of discounting, so if you’re a very good retailer you got to fix up your mix of business so that you discount the shit out of something to try and pick it out on something else.
“And if you’re discounting the shit out of something and you can’t pick it up on something else, guess what happens – you go broke.”
Mr Harvey said many retailers, including the big chains, were under huge pressure because of increased competition in a sector fighting it out for the consumer dollar.
“Mind you, we got that too – a number of our guys out there are losing money because they’re just not good enough.”
During this February earnings season, retailers have been reported relatively flat sales on the back of major discounting which started during the pre-Christmas trading period.
Earlier this month, department store giant Myer said it had a disappointing Christmas with first half sales rising only modestly despite heavy discounting.
Fashion retailer Country Road reported a fall in first half profit, in part due to heavy discounting.
Women’s apparel retailer Specialty Fashion Group said the first eight weeks of the second half of the 2009/10 financial year had been marked by aggressive discounting in the sector.
