Australian retail giant Harvey Norman is coming to New Zealand and small retailers better watch out.
Harvey Norman, which sells computer equipment, electrical goods and furniture, plans to open two stores in Auckland either by Christmas or early 1997. One of the stores is expected to be in Manukau.
Tony Gattari, group computer controller in charge of Harvey Norman's computer business, isn't saying exactly when the stores will open.
"There is no doubt that we will be in New Zealand, certainly by early next year. We have to make sure that we have the stock and it takes about eight weeks to get in furniture stock."
Harvey Norman, which has an $A1.1 billion turnover, of which $A350 million is computer goods, has 56 stores, 35 of which are computer superstores, around Australia.
Gattari says the computer section is the fastest growing part of the business and this month stores will start selling local area network components.
"Harvey Norman is always on the lookout for new areas and we have to continually change. We're very strong in the home market in Australia but we've found the way to increase sales is by tapping into new markets such as networking.
IDC New Zealand general manager Graham Penn warns small PC retailers within a 15km radius of the Harvey Norman stores to start rethinking their retail strategy.
He believes Harvey Norman, which is a franchise operation, isn't aggressive in pricing but does compete on range, ease of access and availability.
"Harvey Norman is aggressive and knowledgeable in the market. It makes it on range and availability. It's a time and place game rather than a price game, although there will be some aggressive 'get them in the door-type' pricing.
"However having product available is one of Harvey Norman's greatest strengths. One of the problems with a lot of PC retailers today is you can't go in and buy a PC and take it away with you. You often have to wait a week because they carry minimum retail stock. Harvey Norman says 'come in, it's available today'."
Penn says PC dealers, unless they can add value, will find their business shrinking. Either they will have to add value to their broad-based services or start looking after vertical markets, like doctors or lawyers.
"If they just want to flog printers, PC and games software, they will have a terrible time."
And if Harvey Norman finds itself battling with New Zealand's incumbent mass retailer in the computer business, Noel Leeming, small businesses may find themselves getting trampled underfoot.
"My advice is if you're a small reseller or small distributor for that matter, target some vertical markets and add value. Start now because it's too late once they're here."