HARVEY NORMAN IN EXPANSION MODE
WITH the opening of Harvey Norman’s first store in Johor Baru Paradigm Mall last week, the Australia-based retailer has kicked off its aggressive expansion strategy in Malaysia.
The company, which currently has 16 outlets nationwide, is looking to open more than 40 new stores over the next five to 10 years.
Harvey Norman Asia managing director Kenneth Aruldoss tells StarBizWeek that the company has become a household name and trusted brand in Malaysia.
“We believe Malaysia is a very good market for Harvey Norman, and this is why we are looking to expand throughout the country,” he says.
With a population of over 31 million and a growing middle class segment, he says Malaysia is an attractive market for international retailers like Harvey Norman.
The retail giant is looking at opening its outlets in all the capital cities and big towns across the country.
“We are opening three stores in Johor in the next five years, and one in Malacca and in Ipoh as well,” he says.
Ipoh, he notes, is an attractive market as many Ipoh-based customers often travel to the Klang Valley to shop.
The company is also looking at expanding in Penang, where it already has two stores.
In East Malaysia, the retailer plans to open its second store in Kuching, Sarawak and one in Miri next year. It also plans to open its first store in Kota Kinabalu, Sabah.
After that, the company will set its sights on smaller towns including Kuantan and Kota Baru.
“The reason why the expansion may take up to 10 years is because it is dependent on the readiness of the new malls these stores will be located in.
Harvey Norman opened its first store in Malaysia at the IPC Shopping Centre in 2003.
The store was later revamped into two levels and is now its flagship superstore in Malaysia. It is also the first store to host the company’s “Games Hub” in Malaysia, a special set up within the store where gaming enthusiasts can find the best gaming brands, machines and accessories in one place.
“When a gamer walks into a store, he or she wants to see all the brands in one place and be able to compare products.
“This is what we want to provide them with,” he says.
The offline experience
Harvey Norman introduced its online platform about three years ago, where customers can choose to buy online and pick up the items in store s, or have it delivered to their homes.
Aruldoss, however, says most customers still prefer the in-store experience.
While the online business is gaining traction, he says it only accounts for less than 10% of the company’s sales.
“A lot of people talk about the online model, but one thing about consumers, especially women, is that they want to ‘touch and feel’ the products first.
“People want to buy from a store or retailer that can demonstrate the product, allow them to touch and feel the product before they buy it.
“How can you buy a mattress or a sofa without lying down or sitting on it? This is why brick and mortar retail continues to do well globally,” he says.
The company also does a lot of product demonstrations in its stores, which appeal to potential buyers. Harvey Norman, he says, is all about the ultimate customer experience.
Aruldoss says between 65 to 70% of their shoppers are women, and this is why their stores are carefully designed to appeal to women.
“Who makes the decision on a fridge or washing machine? Or even cooking products? We are very careful about how we design our stores to ensure women shoppers are comfortable – from lighting to the layout of products – it is attention to detail,” he says.
The men, he says, are usually attracted to the wide range of televisions and computers in their stores.
“Don’t get me wrong, we target at both men and women.
“The stores are designed to cater to both genders but with a special attention to details that would appeal more to women customers,” he says.
There are four categories of products offered at Harvey Norman stores – electrical, computers, furniture and bedding.
In Malaysia, the electrical segment is the biggest contributor to the company’s turnover. Within the electrical space, televisions are the best sellers, followed by cooking items, washing machines and fridges.
Laptops and Modern PCs are the most popular items within the computer category, while sofas are the top selling furniture product. In the bedding segments, mattresses are the top sellers.
“Shoppers are looking at more designer-type products. They care about how good it looks in the house.
“Furniture and kitchen set-ups used to be about necessity, but now its more of a ‘want’ and people want latest products with advanced features that look good too,” he says.
Shopping with confidence
There are many factors that set Harvey Norman apart from other retailers in the country.
Apart from the sheer size of the stores, which allow them to offer a huge range of products, Aruldoss says their pricing and after-sales service give them a significant competitive advantage over other retailers.
“There is no other store in Malaysia that has such a comprehensive range of products.
“Customers want to see a wide selection of products, not just three or four options,” he says. Being a multinational company, Harvey Norman also has buying power.
The company imports its exclusive furniture and bedding designs from countries like Italy and Germany, and as it buys in bulk, the company can offer products to customers at competitive prices.
“Malaysians are starting to see that being a global brand, we can not only offer the best pricing, we also have the range, a good refund and exchange policy, a deposit policy and extended warranties, which we call ‘Product Care’,” he says.
Another factor that sets Harvey Norman apart, he says, is its “look and feel”, and the customer experience.
“You will not get a look and feel like this anywhere else. People want to walk into a store that provides a great shopping experience. Our ‘Shop with Confidence’ policy is a unique selling proposition.
“Harvey Norman is doing so well because we can provide something that a lot of other retailers cannot do. It is the service.
“If something breaks down we fix it or replace it with our Product Care coverage,” he says, adding that the company pays a lot of attention to training its staff on product knowledge as well as how to serve the customers. The company also has a “Happy Sleep” policy, in which customers who buy their mattresses can return the product within 14 days if they are unhappy with it.
This, he says, gives customers the confidence to purchase the items.
“This is the point of difference,” he says. Moving forward, Aruldoss says the company sees bright prospects in Malaysia
“Harvey Norman loves this country for its cultural diversity as well as the growth potential we see here. People call it a tough market, but we are doing well and will continue to expand in Malaysia. The aggressive expansion will also bring about more employment opportunities for Malaysians,” he adds.