How Harvey Norman opened the iconic Aussie superstore to the world
It’s a company well-known in Australia, with 280 stores across the country and almost $5 billion achieved in sales each year. The story of Harvey Norman is often talked about within a national scope, yet there’s much more to the 35-year old brand.
Speaking to Ross Greenwood on the Origins Australia podcast series, Chief Executive Officer of Harvey Norman, Katie Page explains how she turned a national institution into a global success story, and the key lessons learnt along the way. https://omny.fm/shows/origins-australia/origins-australia-smiggle-1/embed?style=cover
Do what you know and test the waters
In 1997, 15 years after the business was first established and had experienced domestic success, Harvey Norman made its first international move. A trip two years prior to Auckland, led by Katie Page, saw a gap in the New Zealand market for a retail super store.
Expanding globally not only requires you to understand the cultural differences and consumer buying patterns within each market, it also requires you to deal with management and people remotely. To understand any potential hiccups that may arise, Page recommends first expanding into a market that is a little closer to home. For Harvey Norman, this meant targeting New Zealand as their first overseas market to identify and solve any teething problems. A strategy that would prove to be very successful.
Become part of the furniture
After realising future growth in Australia and New Zealand was limited, the company began to look further abroad, as Page notes in the podcast: “I’ve got a great brand, but what’s the future of it if I’m just relying on Australia and Australian sales if we think we’ve got something worth going overseas for.”
Looking at emerging markets, they first cast its eyes on the South East Asian market, followed by more distant Eastern European markets, whilst ensuring they were building the business organically, as they had done in Australia.
In 1999 they launched in Singapore, acquiring several stores, which were then rebranded under the Harvey Norman name. By this point, Page and the team had learned some important lessons about expanding into a new global market. Through this process, the retail chain was able to obtain nuggets of local knowledge to adapt their approach and integrate within the culture. Page approximates it took five years for the superstore to become part of the furniture – an impressive achievement, considering flagship stores were still quite a foreign concept in Singapore. Soon enough, Singapore became the company’s fastest-growing international market.
If you’re looking to venture beyond your domestic borders, it’s important to remove any assumptions around the idea that if your product sells in your home country, it will sell in other markets. Instead, Page recommends businesses take a flexible and adaptive approach and seek to understand the local market and community before expanding.
Hiring local leaders is key to this, as it helps provide a local point of communication and a window into what the local customers are saying and how they are communicating (local idioms and nuances). It also means you can understand how the local market reacts to your product and it allows you to have a constant local presence.
In each global entity – from New Zealand, Singapore, Slovenia and Ireland – the Harvey Norman team was built organically, bringing local people through and essentially building a local business. This was key to the company’s global expansion, as this ensured the culture and systems in place aligned with the values of the market in which it was based.
Strategy should always be long term
Page credits building a long-term thinking company, as opposed to a 3-month, 6-month or even 12-month strategy, as key to their success.
Working with the top technology brands in the world meant Harvey Norman were fortunate enough to see trends a lot sooner than other brands. In turn, they could identify emerging markets and expand into spaces where they saw the world was shifting towards. Another key point to their expansion, was establishing a good base location, which would allow for organic expansion into neighbouring markets.
For South-East Asia, this was the tech-savvy market of Singapore, which became one of the fastest-growing markets. In Eastern Europe, this was Slovenia. Launching in Slovenia would help put the country on the map and because of its proximity to Italy and Austria, Harvey Norman were confident they could attract customers from both countries looking for the lower prices available in Slovenia.
The company weren’t without their challenges though. In 2008, the Global Financial Crisis saw their sales in Ireland drop 25% overnight, almost sending it into administration, and in 2013 the retail market stagnated, which saw Harvey Norman’s profits sink for the second consecutive year. However, Page highlights the importance of thinking long-term in order to survive and endure extremely difficult periods in global markets.
“We know everything is a cycle and if you’re the last man standing when that cycle starts to turn you can do very well. Our strategy is always long term, so we stuck to our strategy. Ireland is now the fastest growing economy in Europe.”
One of the biggest challenges of going global is being exposed to market volatility. That’s why it’s important to ensure you have a currency strategy. OFX provides several risk management solutions for currency fluctuations, including forward contracts and limit orders, which can help to provide some protection against market volatility as you look to expand your business overseas.
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