Harvey Norman’s venture into the stationery market is sending waves through the Australian OP market. For the first time in more than 15 years Officeworks will have a fellow Australian rival in the domestic market.
Ofis is the new retail chain causing all the commotion. Gerry Harvey, the executive chairman of Harvey Norman, announced that the brand name had been registered back in July. It has since been reported that he has his eye on several key sites for potential stores across Australia, some of which are rumoured to be opening before Christmas. It is understood that the new chain could be operating as many as 50 stores within the next five years. While Ofis won’t be an immediate threat to Officeworks, Harvey is said to be planning on matching the scale of the Officeworks operation. He said: “They’ve got 100 shops. Ideally we’d want to have 100.”
Although no concrete details have yet emerged as to the format and locations of the new stores, the Australian press has reported that Harvey has said that the Ofis chain “has got a lot of synergies with Harvey Norman and our computer and electrical shops, and whether we would put it next to them, or as part of them, or standalone, that’s the interesting part.”
Commenting on whether the Australian market can support two full-blown OP retail chains, Harvey said: “Officeworks is the dominant player, but there’s a whole heap of other people who sell stationery and that sort of thing. I’ve always thought that maybe there’s not room for two, but now we’ll put that to the test – if we make no money, then neither will they.”
When Coles Myer was recently put up for auction, Harvey did consider bidding for Officeworks, but he later decided it wasn’t worth the asking price. He has since told Lateline Business, a programme provided by Australia’s ABC TV, that if Wesfarmers was to put Officeworks up for sale at a better price in the future, he would consider buying it. He said: “Would I look at Officeworks tomorrow if it came up? Yes. I wouldn’t have to open my own chain.”
The thoughts of Officeworks
In response to the seting up of Ofis, Joe Barberis, Officeworks’ managing director, told OPI:
“Officeworks has an established presence in the Australian OP market, with 109 retail stores across the country as well as direct channels in our website and call centre. We recently announced to the market an EBIT increase of 14 percent, to AUD$85.4 million ($73.6 million) for the 2007 financial year.
“The OP market in Australia is already very competitive and dynamic, with literally thousands of retailers competing, including supermarkets, discount department stores, newsagents and the local postal authority. In addition, global players such as OfficeMax and Corporate Express are very active in the direct market.
“Ultimately, though, our customers keep us on our toes – we’re continuously striving to improve our offer and deliver an innovative in-store experience. We are confident that our position in the market is strong and our focus on delivering to customers will see us continue to do well.”