Gerry Harvey’s stark message: Many retailers to collapse post-Christmas

Gerry Harvey is at it again. The retail veteran has predicted gloomy times ahead for the retail industry, saying that while the upcoming Christmas will be a bright spot for many companies, the aftermath will be worse.

But industry experts aren’t so sure. While they agree the retail industry is definitely on the back foot, there are early indications that businesses which have held on so far may begin to see improvements in the new year.

“The companies that have survived are probably in a better place than they were at this time last year,” Falcon Corporate Advisory retail expert David Gordon told SmartCompany this morning.

Gerry Harvey’s comments came during Harvey Norman’s annual general meeting. Harvey said that while there have been plenty of retail collapses, “there’s plenty more to go”.

He also said the first half of next year will be “extremely difficult”, and puffed up his own company’s position, saying “if anyone is going to be the last man standing, it’s Harvey Norman”.

Harvey’s comments refer to the fact that most retail collapses occur in the first third of the year, as Christmas sales fade and tax bills start coming in. But others disagree with the harsh prognosis – David Gordon says businesses have a better chance of survival next year than they did in 2012 or 2011.

“Obviously, there have been a lot of collapses, and we’ve seen weak retailers go. There have been a high number of important retailers that have gone bust.”

“But those that are left actually feed from that. They benefit from the reduction in competition. And if they have debt, you could assume they’re in a better position to handle that now.”

It won’t be good for everyone, Gordon says, acknowledging retailers in low-quality shopping areas will continue to feel the pain of lower sales. But for businesses attached to well-performing shopping districts and centres, he says, next year may prove to be positive.

“Successful shopping centres are continuing to open up and expand. What I think you’ll find next year is a continuing trend where the successful centres take share from the not-so-successful shopping centres.”

Others, however, are less positive. Australian Retailers’ Association executive director Russell Zimmerman told SmartCompany this morning that the weather will play a big part in retailers’ performance this year.

His comments echo Gerry Harvey’s, who said that if the cool weather comes through, Harvey Norman stores may suffer.

“There are a lot of retailers reliant on a hot summer,” says Zimmerman.

“Look, I hope there won’t be a number of businesses going like it has in the past. But no one is immune – the pain is hitting all segments of the market.”