The Australian impact on Irish business is set to increase in the coming weeks after furniture and electrical retailer Harvey Norman disclosed plans to open five new Irish stores before the end of June.
The investment by the Australian retailer, famous for its brash adverts, comes as Australian investment fund Babcock & Brown Capital courts Eircom, the former State-owned telecoms firm.
Harvey Norman entered the Irish market in 2003 with stores in Swords, north Dublin, and Dundalk, Co Louth. It opened a third store in Cork last October, a development that helped lift its sales in the six months to December by 28 per cent to €26.1 million.
Harvey Norman's drive to rapidly increase its Irish presence is designed to give it scale and greater efficiencies in a market that is expected to be one of the biggest beneficiaries of the release of billions of euro this year and next from the Special Savings Incentive Scheme.
The new stores will be in Dublin, at Blanchardstown and Rathfarnham, as well as Limerick, Tralee, Co Kerry and Mullingar, Co Westmeath.
"New store openings in Ireland will give the Harvey Norman brand critical mass, greater bargaining power with suppliers and more cost-effective advertising in all media, to take advantage of economies of scale," said the company's Sydney-based parent in its interim financial statement.
"Sales revenue from the company-owned stores in Ireland increased by 28.01 per cent due to the opening of a new store in Cork during October 2005."
The company expects to lose money in Ireland this year but it is projecting a profit in 2007 after its unquantified developmental expenditure this year.
"It will come to fruition next year," said the outgoing general manager of the Irish unit, Tony Smith.
The latest available accounts for Harvey Norman Holdings (Ireland) Ltd, which runs the Irish business, show that the company incurred what its directors described as "significant losses" in its first trading year.
The accounts show that the company lost €3.28 million in the year to June 2004 but they also indicate that it managed to build its sales rapidly, with a turnover of €26.85 million.
Harvey Norman is unusual among international retailers in Ireland in that it did not develop a presence in Britain first. On the contrary, the company's long-term plan is to use its unit in the Republic as a bridgehead into the North and Britain.
"Our idea is to get a good foothold in Ireland and then take our model into Northern Ireland and then Scotland and down into the UK over the next 10 or 15 years. That is our ambition," said its founder and chairman Gerry Norman in remarks to Australian reporters.
While the company's only other presence in Europe is in Slovenia, where it plans a second store, it is also planning to move into the market in Croatia.
The company's store size in Ireland ranges from 2,880sq m (31,000sq ft) to 5,390sq m, with roughly two-thirds of its floorspace taken up with furniture and bedding, while the remaining third is used for electrical goods.
