Harvey Norman takes on discount retailer

BY ASHER MOSES

A vicious war of words has erupted between retailing giant Gerry Harvey, head of Harvey Norman, and an upstart online electronics seller over the price of television sets.

Ruslan Kogan, founder of online retailer Kogan Technologies, has appeared regularly in the media including on Today Tonight claiming his TV sets are of similar quality to the big brands sold by retailers such as Harvey Norman but far better value - and in some cases half the price.

"Our big screen TVs are using LG and Samsung panels," said Kogan, who plans to run a satirical ad on TV this week claiming all of the money Harvey Norman spends on advertising is pushing up prices on its TV sets.

"There are thousands of LCD TV brands out there but only a handful of panel manufacturers in the world ... they all sell their panels on the free and open market."

Asked to comment on these claims in a phone interview today, Harvey did not mince his words.

"This bloke won't go away; he's a con," Harvey said.

"He words it in such a way as if he's buying from the same factory - he's not. All of these big brands, they don't let their products go out to someone like him. Why would they do that? They'd be setting themselves up for someone like him to launch against them."

But Harvey admitted he did not know from which factories Kogan bought his products. Kogan said the factory that assembles his TV sets buys the panels from Samsung and LG. Neither company has responded to a request for comment.

A clearly angry Harvey, who swore several times, said Kogan was not comparing apples with apples, and that Harvey Norman also stocked TV sets from lesser-known brands that were just as cheap as those offered by Kogan.

But he said with the bigger brands you were "paying for quality and guarantee" and that the Kogan products were an "inferior product".

"When he says he's cheaper, if he is, it's very marginal and sometimes he's dearer - but it's all unbranded shit, it's not the quality product," Harvey said.

"We've been around for 50 years. You don't stick around long if you sell shit. I don't buy anything that's not a brand - even toilet paper."

Harvey compared Kogan to fly-by-night retailers who are here one day, gone the next, causing chaos when one needs to claim on warranty or get new parts.

In response, Kogan said: "We've been around now for four years, sold over 100,000 products and are growing month-on-month - sorry Gerry, but we're here to stay.

"Our customers are posting these reviews and they're saying that they've compared it to the big brands and Kogan goes pound for pound with any of them," Kogan said.

Kogan has challenged Harvey to a debate on national TV, but Harvey has rejected the idea.

"Why would I bother? That just takes me down to his level," he said.

Kogan said he respected Harvey as a businessman but "swearing and getting aggravated at new and up-and-coming businesses that are reinventing the marketplace isn't the way to move your business forward".

He claimed he was able to keep his prices low by ensuring his business had low overheads - all operations are online - and by relying on word of mouth instead of TV advertising.

He said traditional retailers needed to change with the market and customers were demanding better value.

"I appreciate [Harvey's] opinion but denial is not in Egypt and the marketplace is changing ... you can't invent something 40 years ago and say, 'Well that's how we'll do it for the next 100 years,'" Kogan said.

Jez Ford, editor of Sound & Image magazine, said he had tested a Kogan TV and "it actually performed quite well for the money".

However, Ford said he would not publish reviews of Kogan products in his magazine because specifications of its TV sets changed regularly.

"When I spoke to them about this they said yes, the TV specs do change quite regularly, but only for the better," he said.

"For us as a magazine we can't review them because if we review them what we review may not be the same as what people will receive when they buy them. That doesn't mean they're bad."

Ty Pendlebury, TV reviewer at CNET.com.au, said it might be true that Kogan used the same panels as Samsung but there were a number of other factors that determined the quality of a TV set, such as the image processors.

Chris Ruggles, team leader of the home digital department at Choice, expressed similar sentiments.

"The quality of the picture is determined by the panel, the processor, the factory settings, the backlighting - there are a lot of factors in there, and just having a [brand name] panel is not a guarantee of a good picture," he said.

"That said, there is no reason why a Kogan couldn't turn out a decent TV. There's no reason why a major brand other than Kogan couldn't turn out a not very good TV - and we've seen it. It's really down to looking at the image yourself and saying do I like it or do I not."

- © Fairfax NZ News