Harvey Norman looks to e-commerce

Harvey Norman is planning to offer an e-tail business to complement its bricks and mortar stores over the next three years, after it completes a timely upgrade to its IT systems.

Speaking at the CeBIT expo in Sydney Monday, Harvey Norman chief operating officer John Slack-Smith [pictured] said that to expand into online [sales] the retailer first needs to deliver the transformation of its underlying technology systems. 

"Today we have nothing from online activities. Over the next three years, we won't see a great deal of change in that regard either. But past that three years, in five to ten years, we're in for a wonderful and exciting change to what online activities will do to complement retail today," he said.

Slack-Smith said Harvey Norman is "undertaking a body of work" that will "fundamentally replace or enhance" the existing systems over a five year period.

"It will be the platform that will place our company to multi-channel growth in the next decade. It will include, order and pay and dispatch, tracking online, reserve and pick-up and order delivery," he said.

Slack-Smith said the retailer currently uses "a number of home grown and purchased proprietary systems.

"They've been successful...but our systems have had to keep pace," he said.

For the merchanising side of the business, Harvey Norman has chosen SAP IS Retail and has also partnered with the German software giant was for master data management.

The process of choosing vendors took 18 months, he said.

"Our transformation activities over the next three years will reduce operating costs, reduce out of stocks, reduce lost opportunity and increase customer satisfaction, which is critical."

Slack-Smith said he had "never seen a more competitive environment than I do today.

"It's a dynamic and fluid environment. The access to information is wonderful for consumers - it's a terrific for consumerism because it drives improvement and drives change.

Slack-Smith said 2010 is an "interesting time in retail...the retail industry right now is very much realising the importance of the fiscal stimulus the Government put in place in April, May 2009.

"That definitely had a positive impact on the economy and it's causing us to have our sleeves rolled up," he said.

Marketing

Harvey Norman is also looking to digital technologies to augment its traditional marketing activities.

The traditional business model for Harvey Norman was to "launch a catalogue and engage" the consumer, Slack-Smith said.

"The hallmark of our go to market over twenty yearrs will be complemented by digital advertising in the future - which will take us into a new area, but won't change the fundamental position," he said.

"We will be marketing far more one to one to consumers, or as one to groups of consumers as opposed to whole communities."