Harris Scarfe CEO Graham Dean on the importance of a consistent strategy

One of Australia’s oldest retailers, Harris Scarfe, has traded continuously for 175 years. Here, we speak with CEO Graham Dean about the challenges of scaling a business at the right pace, the importance of a consistent growth strategy and how global department stores can compete with specialty retailers.

Inside Retail: Harris Scarfe is marking 175 years of trading this year. That’s quite an achievement, especially given the challenges the department-store sector has been facing for quite some time. You know better than anyone what a tough category it is in which to compete. Can you provide some insight into the history of Harris Scarfe? What have been some of the biggest turning points in its history, and what has enabled it to survive for nearly two centuries? 

Graham Dean: Yes, it’s a hell of a history. It began back in Adelaide in 1849. It was two Englishmen who started the brand. They were immigrants and started the business in Adelaide, opening one shop, and then it grew from there into a number of different stores over the first 30 years. There were numerous acquisitions subsequent to that to build the brand, and then interstate opportunities cropped up. And over the years it just grew and grew and grew.

But as you said, it certainly had a few challenges. As any business tries to scale, there are always challenges along the way, mainly economic headwinds. That was way before my time, obviously. 

My interaction with the brand has been over the last 10 years as CEO, so I’ve definitely had a lot of experience with Harris Scarfe. It has been through numerous ownerships and transformations over its history, but it has been a continuously trading retailer over those 175 years. So it has managed to survive many challenges over that period.

IR: What was the product offering like in the early years of the business?

GD: It started as an ironmonger or hardware store, which is very similar to most department stores. It would have sold rifles, saddles for horses, ironmongery, that kind of thing, so a complete array of everything you need, kind of a one-stop shop in the middle of the town at that point. And then it evolved into a department store model, stocking everything from fashion through to home, through to cosmetics. More recently, we’ve had to hone those ranges because department stores have been under pressure for the past 50 years from the development of competition, especially the internet. The biggest challenge would have happened in the last 30 years.

IR: Are there any interesting artefacts or anecdotes that you’ve uncovered from the history of Harris Scarfe?

GD: We do have a number of heritage pieces that we have preserved over the years. They were originally held in the Adelaide office, which has now moved to Melbourne; for example, we have the original CEO’s safe on display. That would be probably a hundred years old. We also have a number of cabinets with a lot of pictures. We have portraits of the original founders of the business, [Mr George Peter Harris and Mr George Scarfe], up on the wall in the office. We have lots and lots of ledgers, the original financial ledgers, going back a hundred years, which are all handwritten. And many pictures of the original workforce. 

IR: I wonder if looking at some of those historical pieces has shined a light on the different challenges the business faced back then. You mentioned that the toughest period has maybe been the last 30 years, probably because the pace of change has accelerated so much. But back in those early days, what were the challenges the business faced?

GD: I think in those days, it was just, how do you survive in a market that is expanding when the competition starts to grow? How do you go from being a one- or two-shop business to becoming a chain of stores? That was very difficult. Many attempted it, but very few were successful and certainly not successful in surviving this long. I think there is something quite special about any business that is able to survive through the ups and downs of the economic challenges and expand their businesses across multiple states, because that is not easy to do.

IR: Why is that, do you think?

GD: Scaling a business takes a lot of courage and you need a very strong strategic plan. Because if you’re going to open across states, you need the logistical capability to support that expansion. It requires being able to build the scale of the business to support it as you open more and more stores, but not cripple it in terms of the cost of running it.

There is a real skill to being able to scale in a commercial way so that the business remains viable for the long term. Many scale too quickly and then run out of cash. There are many examples of that. So it’s about being able to scale in the right way over time, not to rush it, just to find the right opportunities. And we still deal with those challenges today. There were 66 stores in 2019, now there are 60 stores in 2024. So we’ve had to expand and contract a bit.

IR: You mentioned how Harris Scarfe’s product offering has evolved over the years, based on the market and competition. Have you reflected on the role of the department store in retail today and how it has changed?

GD: Many times. Luckily, I get to travel to other countries to do scoping, to see what’s happening in the department store world. And I’m a Pom, so I’ve grown up in retail. I know the department store landscape in the UK very well, and I’ve studied it in the US over many years. So I am well aware of the evolution of the department-store model. It is something we are acutely aware of and something that we have paid particular attention to during our growth, particularly over the last 10 years. 

We don’t actually think of ourselves as a department store, for example. Department stores traditionally have a broad array of categories because they’re trying to service one huge shop over many levels; they’re trying to service customers in terms of offering them a complete array of products, from accessories to toys to cosmetics. The trouble is as the competition has developed over the years, you now have specialty retailers that do a really good job in all those areas. They didn’t exist 30 years ago. So now, department stores have a real challenge in that space. How do they differentiate themselves when there are specialists that do such a good job? 

What we’ve done is, rather than trying to have lots and lots of categories, we’ve focused on the categories that we want to play in. And we try really hard to be dominant in those categories. When I first started at Harris Scarfe, we sold children’s wear, we sold camping; we don’t sell those categories anymore because it’s very difficult to be credible if you don’t have the range, width and depth. So rather than play in too many categories, we decided to hone in and focus on hard home, manchester and apparel. We focus on what we call ‘famous for’ categories – famous for cooking and entertaining, famous for bedding, and famous for intimate apparel – and we try to have a big, authoritative range in those areas and be dominant in those areas. That has been the focus of the last 10 years and it’s definitely working in this current environment.

IR: What do you make of the department stores that don’t seem to have taken that same approach?

GD: I think it remains a challenge for the traditional department-store model, there’s no question. That’s why department stores are reducing their footprint, or getting out of, stores in [shopping] centres that may not be as strong as they once were. What you see, not just in the Australian market, but around the world, is department stores either completely disappearing, like House of Fraser or Debenhams in the UK, or contracting the number of stores they have or the amount of space they occupy. 

For example, in Southland, a Westfield Centre in Melbourne, David Jones has come out of one entire floor and condensed their offer. That’s an evolution of the department store, but that means that they have to condense categories or come out of categories. I think there’s much more work that they still need to do in that space because there is too much competition. 

IR: Harris Scarfe was acquired by the Spotlight Group, one of Australia’s biggest private retail companies, in 2020. Can you provide an update on the biggest changes to the business since the sale, and your key areas of focus right now? 

GD: Network expansion is definitely still on the agenda and has been on the agenda since [the] ownership [change]. We’ve expanded from 43 stores to 60 stores and we continue to look at opportunities to further expand the business, but obviously we will take up those opportunities only as and when they become available and, more importantly, when they are within our strategy. So we will open stores only in locations where it makes sense to do so commercially. 

Spotlight Group has invested in refurbishing some of our older stores – putting new fixtures into all our stores and doing a complete rebranding exercise across every single Harris Scarfe store to make sure the up-to-date branding is seen in every shop front. We’ve updated the look and feel, so if we put out a catalogue or a TV ad, the same branding will be seen when the customer goes to the store [as on] the website, so it’s [about] consistency and modernising the fleet, which gives a much better brand experience overall.

Big investments have been made in the website capability. The benefit of joining a big group is that we’re able to leverage the scale and go onto their platform, and we’ve definitely done that with the website capability. A lot of work [has been] done with the systems – logistics, for example, is much better. 

The investment in marketing has been significant since [the] ownership [change]. The other thing that we’ve done is we’ve expanded what we call our ‘Friends Pay Less’ [program]. You can sign up to be a Harris Scarfe ‘friend’, and that gives access to discounts on products or promotions that wouldn’t ordinarily be available. There has been an aggressive growth plan for that particular program under the Spotlight Group. 

IR: This investment comes at a time when the retail sector broadly has been struggling. A lot of leaders are seeing a decline in discretionary spending. What has the past year been like for Harris Scarfe?

GD: There’s no question the retail market has been challenging for a number of years. We fully understand those headwinds, but one thing we have developed and are very proud of is our “great brands, great prices” tagline, which is above every door and every shop and embedded in all of our marketing. We live and breathe that in terms of making sure that we’ve got the brands that people want and love, but also delivering those to market at great prices. As the market gets tighter or more difficult, we’re able to flex that approach, and that seems to resonate really well with our customers.

The combination of having that “great brands, great prices” focus, and also building our Friends database – because we’re able to communicate more regularly with those customers – has been a great recipe for success for us. I’m not saying it’s easy in the market, but just focusing on that has been good for us over the last couple of years, particularly the last 12 months.

IR: It strikes me that these are the important things to focus on to drive long-term sustainable growth and stability in a business, and yet they’re not the the splashy things that get a lot of people excited. Do you feel sometimes the industry is focusing on the wrong things, the things that don’t drive actual returns to a business?

GD: I’ve been CEO for 10 years, and the strategy for the last at least eight years has been the same. There’s no knee-jerking. Despite Covid, despite various headwinds that have come our way, which everybody is well aware of, we have kept to the same strategy, and that strategy is to be customer-centric, never forgetting that you have to have the customer at the forefront of every decision, but also, “great brands, great prices” and not changing what we’re famous for. We’re famous for cooking and entertaining; let’s make sure we fine-tune that and get better and better at that. So it’s not knee-jerking. It’s not changing direction all the time. It’s being very clear with the teams, with the leadership, that we have to deliver better and better year after year. We have to remain agile, just not keep changing strategy. The feedback I get from my team is they really appreciate that. They like the fact that we stick to what we know and stick to what we’re trying to achieve. We don’t panic. We just keep trying to deliver better and better.

For example, we won the Canstar award for most satisfied customers the last two years running because we’re focused on the customer. The product knowledge, the training of the teams in store, the culture. Even though in a difficult market you might not do as much training, we double down on the training. In a difficult market, you might not do as much marketing as you normally would. Well, we don’t agree. We think you should do more marketing. There’s market share to be had. You might not buy as much stock from your suppliers to support promotions because you’re worried about what might happen. We actually will double down and maybe buy a bit more. We might be a bit contrary to what others might do, but in a focused way.

How many turnarounds has Macy’s had? We haven’t got a turnaround plan. We have the same plan. We just deliver it year after year and get better and better. So it’s an evolution of the same plan, not a turnaround.

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