Billionaire retail mogul Gerry Harvey says businesses are justified in passing on cost increases through higher prices to maintain their profit margins and prevent bankruptcies, despite the Reserve Bank warning it could lead to higher inflation.
Harvey Norman chairman Gerry Harvey says businesses are well within their rights to pass on higher costs to customers if they want to stay afloat
The retail giant saw a 7.8 per cent decline in retail sales since July 1 as higher interest rates deter spending
Mr Harvey says the company’s Black Friday sales were on par with last year’s despite its website issues
The comments made by the chairman of Harvey Norman follow the furniture and electrical retail giant reporting a near-8 per cent decline in sales since July 1, as higher interest rates deter consumers from spending.
But in a sit-down interview with The Business after the retailer’s annual general meeting on Wednesday, Mr Harvey said businesses were within their rights to pass on higher costs to customers in the form of higher prices or else they would go bankrupt.
“The big problem you’ve got for business going forward in the next 12 months is that I think you’re possibly going to see more bankruptcies than you’ve seen for a very long time, because you’ve got a lot of businesses out there at the moment under extreme pressure,” he told The Business.
“It’s pretty tight out there for a lot of businesses now. If they don’t put up their prices, they don’t survive.”
He argued that higher labour costs were one of the biggest drains affecting the bottom line of businesses, but said there was an upside, even if some “give up because the costs are beating you”.
“The good part about that, if there is a good part to it, is that it does bring inflation down and creates employment and all those sorts of things, which is possibly what’s going to happen,” he said.
