Harvey Norman to Leave Australia?

SYDNEY -- Furniture, white goods, and consumer electronics retailer, Harvey Norman has suggested it could leave Australia and set up in Hong Kong, taking other retailers with it.

CEO Katie Page, the wife of Gerry Harvey of Harvey Norman Holdings (ASX: HVN.AX), has told a business conference that many other retailers were being advised to set up in Asia, and then ship goods to Australia to avoid tariffs, GST, and compliance. While Harvey Norman has considered it, as it would solve many problems, Page suggested that if Harvey Norman did that, everybody else would follow.

Page has again called on the government to add GST to online sales below $1,000. Consumers are currently exempt from paying GST on goods purchased overseas, if the value is less than that mark. Harvey Norman is just one of the major retailers agitating for a lower threshold. The NSW government has also echoed the view, calling for the federal government to cut the threshold down to $30, which is a similar policy to what the U.K. has.

Australian retail is in its worst state for 25 years, according to Harvey Norman, and appears to be undergoing a structural change. For many years, consumers were captive audiences to our retailers, until the Internet came along and started offering products much more cheaply than local retailers could offer. Much of the blame has been laid at the feet of global manufacturers who offer Australian retailers products at higher prices than retailers in other countries. "Global price rationalisation" it's called, and now retailers are pushing back at those same manufacturers demanding the same low prices as other countries. Whether they'll be successful or not is another issue.

Labor costs are also partly to blame. Internet retailers don't really need sales staff, so avoid that cost entirely.

Retailers are now focused on reducing their costs, selling more products online, and generally trying to differentiate themselves from online sites. Several appear to be having some success, including Noni B Limited (ASX: NBL.AX), Super Retail Group (ASX: SUL.AX) and The Reject Shop (ASX: TRS.AX).

The Foolish bottom line
Australian consumers can look forward to a new era in retail shopping, thanks to changes that have been forced onto our retailers. Those that adapt should survive, while others will fall by the wayside.

If you're in the market for some high-yielding ASX shares, look no further than our report, "Secure Your Future with 3 Rock-Solid Dividend Stocks." In this free report, we've put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favorite income ideas. But hurry -- the report is free for only a limited time.

More reading:

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, while it's still available. This article contains general investment advice only (under AFSL 400691). Authorized by Bruce Jackson.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2024814, ~/Articles/ArticleHandler.aspx, 4/18/2014 10:47:20 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 2.54 0.14%
NASD 4,095.52 0.00 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes


Advertisement