Photo credit; Nicolas Nova on Flickr

Harvey Norman has moved from confrontation to convert when it comes to online sales.

The retailer’s executive chairman Gerry Harvey famously described internet retail as “a lot of crap” in 1999 and was skeptical about it even as recently as 2006.

In November 2011 Harvey Norman finally joined the 21st Century and launched a website  that now accounts for 2% of group sales and is reporting annualised growth of more than 100% as sales from the Australian business overall have fallen for six of the past eight quarters.

“We were a little bit behind but we’re catching up,” says Gary Wheelhouse, Harvey Norman head of digital. Harvey Norman was so behind, in fact, that Wheelhouse’s job title didn’t even exist three years ago.

But he agrees with the prediction of Myer boss Bernie Brookes that Australia will follow the US and British markets, where big department stores such as Nordstrom and John Lewis are the biggest players in the online sector.

“Pure plays are great but one of the challenges that they have which we don’t is having inventory close to where customers are, and that’s really driving a lot of our thoughts on development,” Wheelhouse says.

“Very few online retailers would be able to get a camera to a customer in Karratha this afternoon, but we can because we have inventory in 170-odd locations across Australia. A lot of our products are about instant gratification — Lumia 1020 phones and Grand Theft Auto 5, people want it right now. That’s one of the big things driving our growth.”

The store network, mostly franchised outlets, are used as “click and collect” points for customers. The payoff for franchisees is that they have a chance to sell the customer picking up their online purchases something else — on that visit or in the future.

“We think of our store network as being our fulfilment partners, and click-and-collect customers buy more when they go into the store,” Wheelhouse says.

“It’s a local Harvey Norman customer, so sometimes they’re buying online and picking up in store, and other times they’re doing research online and then going into the store, so it works both ways. The benefits for franchisees are about servicing their local customer who is going to do the majority of their business with that store.”

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