Gerry Might Be Right (12/3/2013)
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Rachel
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Many women I know shop online – it is so convenient not to have to hunt for items between physical stores. If you are busy with young children or juggling a job and family, shopping at home is so much easier than going to the shops with the kids. Not only that, but the variety of products on offer is much greater than you’d find in any single store, you can quickly find the best price, and access customer reviews which are not offered in physical stores.
I shop online for anything these days from groceries, toys, gifts, clothes (when familiar with brand quality and sizing), big ticket electrical and recently looked for furniture (dining chairs). I tend to research products, particularly for larger ticket items, I usually check out online reviews, and if there is anything local advertised online, I may favour going to the physical store to avoid postage costs, or waiting for the delivery to arrive… However if there is good customer service, and there are quality products, then I am likely to choose a physical store over an online shop.
For some things, prices are cheaper online including delivery as opposed to than buying locally. Books are definitely something I shop for almost exclusively online now.
Even buying a pair of slippers, I look online to find out where I might pick up a good deal, to reduce time spent hunting in my local shopping centre. If I can find what I need online with free delivery, and of comparable price, I’ll order online. I would shop the same way for most generic things now including fridges or washing machines. A couch, bed and car needs to be tested first hand, so I’d still need a physical shop for that.
Yavuz Atasoy
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My local council collects all sorts rubbish, green waste, dish washers, fridges twice a year provided that I leave them in front of my house at a designated point (just like all of my neighbors) . I have done this for my old music set, big screen analog TV, dishwasher and washing machine. I can either buy early and keep the old ones at my backyard until the designated collection dates or buy at a date close to council’s collection days. This may or may not work work apartment dwellers though.
scottacurtis
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Dear Gerry, from a youngish person (18-30) who values time and convenience, buying white goods online is only getting easier. Perhaps older age categories still prefer the traditional look, feel, touch in-store approach. However, I know many friends who are gravitating towards the online shopping convenience, which includes cars. Why? Because shopping for white goods is the last thing any sane person would want to do over the weekend.
Who does it well? Think Appliancesonline. I have purchased a fridge, washing machine & dehumidifier. I will gladly buy from them again. I was advised when it would be delivered and given an approximate time frame when it would arrive, within an hour window. The small things matter! They even brought it into my unit without another surcharge. That meant I could actually do things in the day.
The catalyst for me buying online was ironically from a Harvey Norman in-store experience. I understand you don’t wish to spend capital updating the faithful dot matrix printers, however the ~10mins queue (Bondi Junction) to buy a simple item, is a reason I will not come back to the shop. The least you could do is move toward the Apple type payment system, “Square” or “Paypal” also come to mind.
Sorry if things have changed since I last visited your store, but I know I am not alone in an age of convenience (efficient) and time poor lifestyle. I suspect the online experience will only get better.
Daniel Falster
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Except in small specialty stores, I rarely find salespeople to be of any help when buying products. They often know little about the item and probably haven’t used it. Online you can find much more information by reading user reviews. That’s one reason I love sites like Amazon. Also there is a much wider range available. My wife and I buy many things online. In our experience, buying online is quicker (half hour at computer then delivered to our door), usually cheaper, and we often find better products (because we have better information). Win, win win. It often feels like the big retailers forget that this is exactly what competition is MEANT to do for society. If someone else is doing something better, i.e. increasing prosperity in some meaningful way, then that industry/company should be allowed to flourish.
Gary Rutter
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” interesting to look at whether buying behavior differs between the sexes”. Ha ha ha ha ha ha ha ha, thanks Roger, that was very funny. You should see my wife when she sits on a leather lounge, her eye’s glaze over and she starts sniffing it. Ha ha ha.
Maybe when you can feel and smell on the Internet.
Thanks. Gary.
Andrew Legget
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Without experiencing the product first, would I buy a fridge online? Possibly, as long as it offered a convenient delivery system. Mattress? No. Lounge, probably not.
The point about going to a physical store first and then researching online is a correct one and something happening at all retailers.
Your two solutions are also valid ways to combat this. The most likely one is to ensure competitive prices and superior service experience. They will still look online first though so not sure how it will play out and how to stop this process, perhaps proving lowest or competitive price in store.
Music is gone however and will not come back so jb beware as you can try for free every day through the Internet and listening to radio.
The true advantage the b&m retailers have is the try first option. If they can make this a strong asset then they can compete. It comes down to experiencing vs convenience and what the customer will value more.
Gerry is probably right about the impact on aspects on his business. Electronics aside he probably has a bit of a cushion.jb, myer, dj’s and similar businesses should be more concerned.
Patrick Greenfield
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yes he may be right in the short term and as a 48 year old i understand Gerrys
idea but all retailers of today have to realise the next generation buy everything on line and that will include the large household items.
Darren Guiver
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Hi Roger
I am not sure sure Mr harvey is right that noone would buy a fridge online as when you think about it, how does the fridge, washing machine, furniture, TV’s etc make it to the Harvey Norman store ? Most of it come from o/s manufacturers via shipping contaniners …. so if you order a big item like a fridge, washer, oven or dishwasher direct from manufactor then you too do the same thing as HN does, i.e put it on shipping containing from o/s to oz and the only difference is that it comes direct to you and not to HN inventory storage network middleman type scenario.Most people who still buy from local stores such as HV still have to have the product delivery by truck to their home so I wonder to see the difference b/w shipping direct from manufactor and HV as far getting the product to your doorstep. The only point of difference i could find was that return policy and statutaory rights sometimes are different as you most likely can’t take it back to a bricks and mortar store locally – i.e return policy issues. They are many online aussie stores that give you local warranties and they seem to be moving a lot of product so i wonder if HV supplier agreement would shut them all down …. interesting, times ahead. Your video update was quite timely for me as I had just had an issue where the bricks and mortor store didn’t have the dishwasher i wanted in stock and had to wait a few weeks and even then could only deliver on certains days and I went home and in under a hour found an aussie online site then i could choose the dlvery day (i choose the very next day!!) and it was cheaper too and they provided the same take your old one away as well. And yes I had thought i would never buy a big ticket item online but after my recent dishwasher experience , plan to get a new fridge shortly the same way!! Surely there must be others doing the same….maybe ??
Cheers
Darren
Steve Baron
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Well I bought a late model BMW online and had it delivered 500km away. I knew what I was looking for and this dealer was selling it at the right price. If I can do that with a car I don’t see why people couldn’t do it with fridges etc. It’s far simpler than spending days trawling around shops. Not sure the female species would agree with me though.
Roger Montgomery
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Interesting to look at whether buying behaviour differs between the sexes.
Jason Squire
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Would I buy a fridge online? I have done so twice now and here are the reasons why. Firstly, because it is faster. I can search for every manufacturer of fridges straight from my computer, I can compare all the technical specifications of all the various models. I can find the best prices. I can determine that the model I am looking for can be delivered within 48 hours. So far so good, but how does is look, feel, smell, touch? That I can’t do online, so off I go to Harvey Norman, armed with more information about the product than any sales assistant could ever hope for. I am advised that they don’t carry that product in the showroom, but that they can get it for me. It may take 7 days to arrive because it has to come from “the warehouse” (aka.. The manufacturer) and for my trouble they will only charge me 20% more than my best price online. It’s a no brainer in my opinion, why would I shop in store?
In fact, I think you have summed up the very problem with traditional retail in Australia. It is suffering from siege mentality, how do we prevent our competitors from trading rather than how do we develop a business model that works in the age of the internet? The problem with putting up the barricades is that you can only hold off reality for so long. Somewhere out there someone is developing that business model that will win in the end. I know which side of the fence I would be (and already have) invested in.
Roger Montgomery
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I know Gerry might have a bit of a read of these comments and if he does, lets hope he responds to these thoughts…
Daniel Victor
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Hi,Roger.What I’m hearing is that people will look at the fridge in the store,and then see if they can buy it cheaper online.If they can’t buy it online they will look for another that they can buy online.Some people might be ashamed to do that,but not many.The thing that might swing it for the store is collecting the old fridge – don’t know if online sellers will do that.