Interview by Anita Lever with John Skippen,
Finance Director, Harvey Norman Ltd.

4 April 2002

1. Interesting advertisement in the Herald seeking Australians to venture to Slovenia to work for Harvey Norman? What kind of response have you received to date?

Harvey Norman has received a mixture of responses. Some of the applicants have capable retail experience while others do not. Unfortunately, a lot of the applicants do not have the necessary Slovenian language skills that would be required. Our research tells us that the local people will only deal with sales staff who speak fluent Slovenian. What we are currently doing, is going through all the applications that we have received. With the successful applicants, we will be seeking to have them sit down with a Slovenian teacher here in Australia to brush up on their language skills. A lot of people from countries surrounding Slovenia believe they can come into Slovenia and pick up the language much more quickly, but that isn't necessarily the case. Overall, we have had quite a good response. It seems to me that Slovenian people are able to pick up other languages relatively easily, but that is not the case the other way around.

2. What has drawn a company such as Harvey Norman to establish themselves in Slovenia?

Why Slovenia, that is a question that everyone asks us on a regular basis. Joze Savell who is a local Slovenian businessman, approached Harvey Norman a number of years ago. Joze was previously a supplier to Harvey Norman as a franchisee working for a company supplying furniture products. Joze approached us here in Australia with the possibility to do a joint venture in Slovenia. The reason it was looked at closely, it that Joze has been a long term supplier of over 6 -7 years for Harvey Norman and he explained the many benefits of setting up a Harvey Norman store in Slovenia. Joze researched what the market and opportunities could be, so in December 1999 we had two of our Australian franchisee go to Ljubljana for a week. They had a good look around, and came back really excited to go ahead with the venture.

The format of presentation that Harvey Norman provides would be new to the market so they thought it would be well received in the market place and the opportunities would be great. We consequently formed an arrangement with Joze Savell and acquired a block of land in March 2000. Building commenced in November 2000 and continued through the winter. We received email photographic updates including building works conducted in the snow.

We feel it is a good opportunity to expand and use that as our base store in that region in Europe and from a training point of view, use it as a guideline for future operations. The person responsible for the operation is Managing Director, Greg Norman. Greg is an experienced franchisee within Australia and he is looking forward to this challenge.

3. How do you see the financial future for an Australian company opening in Slovenia?

It will take approximately six months to settle in. The advantage of our type of store is that it will have all its products under one roof. From a financial point of view, it will be difficult for the first three to four months. From a presentation point of view, it will be the most impressive retail store presentation in all of Ljubljana. This is sure to attract customers. We expect the customer reaction will be that the products must be expensive, which is what happened when we first opened in New Zealand. However, when the customer compares the prices, they will soon see that our prices are very competitive as well as offering very good customer service and excellent product presentation.

4. With Slovenia close to being a full member of the European Union, is that an important factor for Harvey Norman to set up in Europe?

No it isn't. This business venture was looked upon due to the recommendations made by Joze Savell and the assessment made on the retail environment as it stood by our Franchisees that went and visited Slovenia. So, I think that the fact that Slovenia may soon be a full member of the European Union will be an advantage, however, it wasn't looked upon as a prerequisite in the first instance.

5. Will the store showcase products made in Australia?

It will have a lot of local furniture either made in Slovenia or from countries close by. There will also be some products made in Australia. Some product designs from Australia will be sent to local suppliers to have made up so there will be a combination of local products, and imported products. We need to make sure that the products will fit into the local culture. We will also have products from Italy and Austria and other nearby countries.

6. Where is the location of the store and when will it be launched?

The location will be Letaliska Cesta, 1000 Ljubljana and the building will open on
19 July 2002. When it is successful, it will be our Head Office for expansion into other European countries. It will take 3-6 months to access the success of that particular outlet. It will act as a guide; is it too big, too small? This store will be one of our largest Harvey Norman retail outlets in the world including Australia.

It will be approximately 105 thousand square feet of retail space, which is very large indeed. Our first store in New Zealand had retail space of 110,000 square feet, which included 80,000 square feet of retail space, the rest of the space is warehouse area.

In August 2001, we opened a specialist furniture in London. We will also use it as a guide for the United Kingdom market. This store stocks specialist up market furniture and occupies 1000 square feet and trades under the name of BB Italia.

7. Will the store policies we in Australia are so familiar with such as 2 years Interest free buying time be the same in Slovenia?

Once again it will be a cultural thing. Any financial offerings will be looked at by what is already being offered to the local community and what the banks are willing to do. I think it's like everything, it all comes down to price. If the cost has to be borne by Harvey Norman business, then it has to be a reasonable cost, as it is part and parcel of the profit. Offers will be tailor made to the particular needs of the consumer providing of course we can have the support from the lending institutions.

8. What type of cultural sensitivities do you expect your new staff from Australia will have to address?

Fluent Slovenian language skills are very important to the general consumer, however, Harvey Norman will promote an Australian type of sales expertise technique. This retail style is far more pro active when dealing with customers. Staff will be very well trained to provide technical information, and will have the knowledge of identifying customer needs and meeting them.

Photographs have been reproduced with permission from Harvey Norman Ltd.
Thank you to John Skippen
April 2002

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