Major retailer, Harvey Norman and its boss, Gerry Harvey, provided all the justification needed for the $10.4 billion financial stimulus package from Canberra, and not too many in the Australian media have managed to put the two together.
Yes, the business media covered the news from the retailer of a surprisingly steep slump in sales in the four weeks to last Sunday, October 12, but didn’t look at what that meant. The Sydney Morning Herald did a decent job in its business pages but the increasingly flakey front page people didn’t even notice the yarn.
Here was a major, experienced retailer saying that he had never seen anything so tough after reporting that same store sales in his company’s 180 or so franchised stores across the country fell in the four weeks to October 12. Here was Australia’s largest retailer in furniture, home wears and whitegoods, consumer electronics and information technology, reporting a rare drop in same store sales across the entire network, and a big one — 4.7%.
What the media didn’t bother trying to understand was that the timing of the slump coincided with Lehman Brothers failing in the US, Merrill Lynch being saved, and AIG being taken over. That knocked confidence and trust around the world and set off a slump in stock prices that accelerated in late September when US politicians delayed the $US700 billion bailout package.
It’s something Ali Moore on ABC radio’s 774 exploited in an interview yesterday. Harvey was frank: it’s the second time in about 20 years, he said, that his firm’s sales had gone backwards. That saw September sales for the group as a whole go backwards (the company is encountering tough trading conditions in Ireland and New Zealand).
Harvey Norman was the first major Australian company to reveal any sort of impact from the worsening in the credit crunch and the intensified stockmarket slump from mid-September onwards. Gerry Harvey says his company will report like-for-like written sales for the previous 28 days from its franchised stores in Australia for each of the next four weeks. He said:
By doing this, the company hopes to give guidance as to what is really happening out in the retail market. There are Harvey Norman franchised stores in every state and town of any significance in Australia.
He said his group was “a good barometer” for discretionary spending in Australia and by publishing the sales for the next month, everyone from Governments to economists and competitors will get an idea of what is happening and how they are going, relative to his performance.
Harvey supported the Government’s spending package, but said what we were experiencing in Australia was a “little problem”. He said the big problem was the world and getting the issues in banking and finance fixed up.
Of course the usual bunch of cynics will say it’s good publicity for Harvey (what, revealing falling sales?), but he is at least trying to do something for the wider economy because he can see the problem and is confused as anyone about what is happening.