As I blogged Tuesday I visited the new Harvey Norman Ofis stationery business in Auburn (NSW) on Tuesday.While it’s not fair to assess a new business which is barely a few days old, this is a Harvey Norman enterprise. These people know retail. They have time to get this right. Given their size and the bucket of cash available to support the new enterprise I think an early days assessment is fair. Their marketing suggests they are ready for such scrutiny.
I went to Harvey Norman Ofis expecting to see a next generation model of stationery and office retailing., something which would make put them ahead of OfficeWorks, the main national brand player in this space today. I didn’t see that. far from it. This was a clone of Officeworks. No generational change. Nothing special.
The customer service was exceptional and the feature displays attractive but the core of the business was nothing special. Laptops were laid our like Officeworks and Harvey Norman. Ink and toner the same. I wanted to see innovation driving sales. Instead, the focus in on creating a sense that this is the place for a good price deal. There is nothing new in that. Especilly when the prices are not amazing.
As I said, the customer service was excellent. If this is maintained then that is a huge point of difference with Officeworks.
The store itself felt, well, bland. The pink logo is the strong visual but even then it’s only in the uniforms, plastic bags and at the front. In-store signage, which may be temporary, was not the bold message I expected.
To support the opening they give you a brown paper bag and anything you can fit inside during your shop you get 15% off. While it’s not a new idea, the execution at Ofis is good – I was offered the bag three times and told to fill it up. I know the idea has been used in at least one stationery outlet in the US with good success.
So, what does Ofis mean for newsagents? If Harvey Norman is committed for the long haul, and I am yet to be convinced of this given what I saw, newsagents need to be prepared for more competition in the stationery space. We need to get back to basics – the best range, keen prices, exceptional service and marketing our offer outside our four walls.
“The focus in on creating a sense that this is the place for a good price deal”
This is the crux of the matter. Harvey Norman’s carpet-bombing marketing is based on creating the impression a customer will get a better deal than elsewhere. In fact, with the exception of high profile promotions, prices are generally at the higher end of the range.
The lesson from HN’s existing business is less about retail innovation and more about the power of mass marketing. You need critical mass to do this.
Newsagents should band together to deliver the critical mass needed for similar high profile campaigns.
This is the key bill, market that you are giving you a good deal without actually giving things away and losing your margin. Newsagents put out promos that cut the retailer margin to next to nothing to be the cheapest, without showing people that we have a huge range of good quality goods and this reduces the effectiveness of the promotion as a profit making tool. We need to wake up and accept that Gerry Harvey makes a lot of money so we should do the same as the big boys. We have the tools already there in our existing catalogs but these need to be improved
Yes, newsagents should band together. While that will not happen channel wide, it will happen within marketing groups.
I went to one and it is pretty new, but I never got offered the paper bag. Maybe it was only a one day thing.
I was approached by 4 staff members in the time I was there. I just wanted to look. I know how to go to a counter and ask if I need help.
One staff member tried to give me bull about the GPS features. I soon had him backpeddling and to be honest I don’t know a lot, but I do already own one, so I am not as stupid as he must have thought I was.
The prices were expensive in my opinion on just the few items I was checking out. There was probably some opening specials but they weren’t what I was looking at.
Just a Officeworks clone for sure, imitation is a sincere form of flattery I guess.
Luke,
Why should we “do the sameas the big boys”? One could argue that a problem with the industry is that too many newsagents try to do this (as do the industry-wide catalogues) and don’t see huge success from it.
Instead of trying to play like the big boys newsagents need to improve the positive parts of their business that make them ‘different’. In most cases (not all) we can’t compete directly – consumer attitude is ver difficult to change and it is more efficient to embrace it than to fight to change it.
The shortfalls of Ofis are a positive for newsagents – they provide us with the opportunity to be innovators, not imitators.
“Back to basics.” Now, that’s encouraging.
Interesting that Gerry Harvey has felt no need to re-invent retail.
There is a healthy living out there for any newsagent who puts stock in danger of being sold. There is no need to discount across-the-board in a local newsagency. Shoppers don’t expect it from us.
While Harvey Norman may not feel the need to reinvent, I certainly do – especially in a shopping centre. The core of our offer is out of date.
Jarrod, You miss the point I was trying to make. I was saying that our catalogs need to include more items that contain higher margin and hence more profit other then the cheap generic crap we throw up now, we should show the people our large range of goods “like the big boys do”, Bunnings, Big W etc don’t fill their catalogs with only cheap stuff, they contain a few loss leaders and then display their entire range, they also don’t just compete on price alone. I know you have a blog and you are a retailer first newsagent second but don’t think the rest of us are not up to speed as well. I’m sure you use marketing tools like the larger supermarkets as well, you are a foodworks store are you not?
$2 for a ream of paper, bargain!
http://upload.ozbargain.com/2008/05/18/490_2ream.jpg
Luke,
Sorry, I must have missed your comment back in April.
The big boys do run only a few loss leaders. They fill the rest of the catalogue with items to both create a sense of range and value for money. Some items are aimed at promoting range, others are reduced (if only minimally) to give the perception of value for money.
It would be hard for newsagents to create a sense of range, when newsagents inherintly don’t have a huge range in comparison to their larger competitors. The stationery catalogues produced by GNS are TOO BIG – most newsagents won’t carry half the stock in these brochures either because they don’t have the space or the products don’t fit their mix.
Instead of focusing on higher margin, we should be aiming for higher quantity sales. While it is hard to compete directly in price with the larger players, too many newsagents price themselves out the the market completely. We need to harness the power of well positioned brands for which we can afford to cut margin (if only slightly) for the purpose of a promotions.
Supermarkets run far more “loss leaders” (rarely run at an actual loss – just very tiny margin) than the stationery industry. Margins are naturally higher in stationery that groceries and given the natue of the grocery market it has to compete more directly with its competitors. There is less competition in the stationery market and better ways to tackle competition than head on.
Marks assessment on April 10 of OFIS is a very well observed and a fairly articulated one. What surprises me however is that some (not all) Newsagents, appear to have not yet come to grips with identifying their key source market. I find it difficult to compare OFIS or Officeworks for that matter with a Newsagency. OFIS and Officeworks will always attract the stationery buyer with a list, and motivated by price. I see newsagencies as providing a valuable service to the Spontaneous buyer, who will pay a premium for the convenience. This is offered as a consumer’s perspective.
Stephen I think you;re right about the difference. One challenge for newsagents is that they don’t know why they exist, they don’t have a clear value proposition. This is a huge barrier to us as a channel addressing the Ofis challenge.
Mark
OFIS Auburn setup shop right across from our computer retail business, lets just say, our customers come into our store, then goto OFIS, but 20mins later they always come back when they see Harvey’s prices 😀
Why would you you want to reinvent the wheel when you can “borrow” ideas from the big boys? They know it works! Newsagents are no where near competing with these guys – different clients – make the most of your local community, have well trained staff with superior product knowledge actually selling in your store instead of collect money at the counter…ohh customer special orders – the big boys won’t touch, neither will they touch bulk purchase discounting.
I started out in the newsagency industry – now focus on office supplies (Melb CBDbased retail ) with a back end B2B sales in direct comp. with CE/Officemax/Lyreco)
I don’t believe newsagents have to worry about Officeworks or Offis if you focus on the above 2 points mentioned.
Great blog Mark – i still drop by from time to time to keep up with what issues are still causing problems for your industry. Great to see someone with so much passion after all these years in such a hard industry.
WOOHOO HARVEY NORMAN OFIS
And as the upcoming closures announced this week reveal, just doing ‘the same’ didn’t do enough to make it worthwhile for HN…
use your real name please “ya mum” or you will get spanked.
Clem you sound like the ideal customer bragging here about giving grief to the poor salesperson just doing their job – get a life
I am sorry, when a salesperson bull craps to me I find it offensive. How that makes me the bad customer I am not sure. I think you are just flinging mud here without actually reading the posts properly.
well I read your post as well clem (#4) and you admit you dont know a lot so why give grief to someone trying to help – the world is an angry enough place without old geizers like you adding to it – just try smiling and politely refusing assistance, it works a charm
NSW no name, what ever Clem is, he will never be a geizer (google it, please).
A salesperson should know their product and should never attempt to hoodwink a customer. He was right to point out the salesman’s lack of knowledge.