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IT super retailers—where is the market going when it comes to the right products, at the right price, from the right place? Channel looks into whether the birth of the IT super retailer five years ago, really did sound the death knell for the small computer showroom as some believed it would?

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By  Paul Barthram Published  May 4, 2003

I - Introduction|~||~||~|IT super retailers—where is the market going when it comes to the right products, at the right price, from the right place? Channel looks into whether the birth of the IT super retailer five years ago, really did sound the death knell for the small computer showroom as some believed it would?

Khalid bin Walid Street is famous in Dubai as the computer street. Shop upon shop in the area is crammed high with everything from home theatres to CD rewriters. On an average day you can find anyone from a tourist picking up a cheap laptop, to an entrepreneur who has flown in from Nigeria hoping to buy vast quantities of hardware to re-export to neighbouring countries.

Khalid bin Walid Street however, is no longer the one-stop shop for everyone’s computer needs. With the advent of the super retailer, the market changed; Vijay Saraf, marketing manager of value-added distributor Emitac believed it was about time.

“It used to be among our major resellers there were no more than three or four doing 50% of what I would call actual retail. When I talk about retail, I’m talking about merchandising, visibility of the name products, new product launches. These resellers were doing retail but not in this way. [The super retailers] expanded our business and took some away from the smaller retailers, because there was a whole market not being addressed by either the wholesaler or by the reseller in this focussed manner.”

So did the effect of super retail translate into super profits? Saraf believed it did. “From nowhere our business grew to 25%. It has [opened up] a very different side to the retail distribution business and one I believe had been missing in the UAE.”

Emitac was not the only distributor to benefit from the boost in sales though. Two years ago Tech Data appointed Chris Rae as its retail sales manager to handle the business with the IT super retailers.

“From my side of the business, Tech Data started from zero. We’ve now turned that business into multi-million dollars worth of business per year, and it’s growing,” said Rae.

The biggest fear of the market when the IT super retailers started was the effect it would have on the smaller resellers, but most are confident they still have a place in the market. Computeronic managing director Ashok Harpalani, a reseller with fifteen years in the business, sees them not as a threat, but an opportunity.

“Everybody has competition, but at the same time it enables you to grow in business. Every day you are aware of your competitor. It’s what keeps you on your toes,” said Harpalani.
||**||II - Homewares & Microchips|~||~||~|
The growth of the market has led to the more traditional consumer electronics retailers to expand into the IT sector as well, as Shivam Goyal, retail manager of Jacky’s Electronics explains.

“Traditionally you’ll see there were very few players in this market, but the expansion has been there… IT as part of our total sales has grown from 20% to 33% in only a few years,” said Goyal.

In terms of super retail outlets, consumers now have dedicated stores such as CompuMe and Technoworld, while companies such as Jacky’s, Jumbo and Plug-ins have widened their in-store selections. Even hypermarket Carrefour has been getting in on the action. Surprisingly though, most of these stores say they don’t compete against each other.
“As the main agents of Dell we don’t have a competitor, it’s all about the experience. We are a specialist, and that makes a difference,” said Munir Sati, business development executive of Technoworld, Emirates Computers’ retail chain.

Dikran Tchablakian, CEO of CompuMe, equally feels the shops could not be more different. “It is very fragmented. There is no such competition to CompuMe because of the concept . You can see some on the retail side but we are far away from them. We are an IT focussed company, not an electronics company with some IT products.”

Arvind Agrawal, general manager of the Information Technology Division of the long-established Jumbo Electronics, has seen many changes in the IT sector but didn’t feel CompuMe had generated much of an impact. “CompuMe started with a bang but we don’t really see them as a very big player. The way we’re seeing it, there are players in Computer Plaza that are starting to do some very big volumes. Larger than the so-called superstores, much larger than those guys, and we’re talking individual players.”

“If you take only Dubai, for us it’s not a major experience, you have to look at the region,” said Tchablakian. “We have created a regional brand, we are more known in Egypt or Saudi Arabia or Abu Dhabi, than Dubai. We started with the concept that we create value for the customer. Telling them what they need to know, making sure the prices and the details on the products were clear for them. You do not need someone to come over and sell you the product in CompuMe, you already have your mind made up.”

It’s a concept, which is still not in favour with some, as Suresh Kotur, product manager for reseller Trinity Infotech explained. “I’ll tell you a personal thing. If you walk into CompuMe, there is nobody there to ask you what are you looking for. I don’t know how the psychology works.”

Tchablakian is aware of the problem though. “At the beginning it was difficult for the mentality of the region to accept this. They wanted to talk to somebody; they wanted to bargain, so at the beginning they could not accept the services the warranties, the extras. Today we have created this path and we have gone and disconnected from the existing resellers, by creating the concept we are providing services and value added service to the customer
||**||III - Impact|~||~||~|
The growth of the market has led to the more traditional consumer electronics retailers to expand into the IT sector as well, as Shivam Goyal, retail manager of Jacky’s Electronics explains.

“Traditionally you’ll see there were very few players in this market, but the expansion has been there… IT as part of our total sales has grown from 20% to 33% in only a few years,” said Goyal.

In terms of super retail outlets, consumers now have dedicated stores such as CompuMe and Technoworld, while companies such as Jacky’s, Jumbo and Plug-ins have widened their in-store selections. Even hypermarket Carrefour has been getting in on the action. Surprisingly though, most of these stores say they don’t compete against each other.
“As the main agents of Dell we don’t have a competitor, it’s all about the experience. We are a specialist, and that makes a difference,” said Munir Sati, business development executive of Technoworld, Emirates Computers’ retail chain.

Dikran Tchablakian, CEO of CompuMe, equally feels the shops could not be more different. “It is very fragmented. There is no such competition to CompuMe because of the concept . You can see some on the retail side but we are far away from them. We are an IT focussed company, not an electronics company with some IT products.”

Arvind Agrawal, general manager of the Information Technology Division of the long-established Jumbo Electronics, has seen many changes in the IT sector but didn’t feel CompuMe had generated much of an impact. “CompuMe started with a bang but we don’t really see them as a very big player. The way we’re seeing it, there are players in Computer Plaza that are starting to do some very big volumes. Larger than the so-called superstores, much larger than those guys, and we’re talking individual players.”

“If you take only Dubai, for us it’s not a major experience, you have to look at the region,” said Tchablakian. “We have created a regional brand, we are more known in Egypt or Saudi Arabia or Abu Dhabi, than Dubai. We started with the concept that we create value for the customer. Telling them what they need to know, making sure the prices and the details on the products were clear for them. You do not need someone to come over and sell you the product in CompuMe, you already have your mind made up.”

It’s a concept, which is still not in favour with some, as Suresh Kotur, product manager for reseller Trinity Infotech explained. “I’ll tell you a personal thing. If you walk into CompuMe, there is nobody there to ask you what are you looking for. I don’t know how the psychology works.”

Tchablakian is aware of the problem though. “At the beginning it was difficult for the mentality of the region to accept this. They wanted to talk to somebody; they wanted to bargain, so at the beginning they could not accept the services the warranties, the extras. Today we have created this path and we have gone and disconnected from the existing resellers, by creating the concept we are providing services and value added service to the customer
||**||IV - Location, location|~||~||~|
While not located in either a mall or a high street at present, Tchablakian does not seem worried with CompuMe Dubai’s present location. “You have to look. We are not in a mall, we are in an area where people come to buy or get information specifically from us. We are a destination.”

Agrawal feels Jumbo also holds its own. “We drive our own traffic; we do not depend on a mall creating a promotion. We do our own advertising. We have a name that we have created first for ourselves.”

Just off of Khalid bin Walid street is Computer Plaza (the Al Ain Centre), a dedicated IT mall, which has proven popular with buyers through offering them a one-stop shop experience. Whereas resellers on the nearby Khalid bin Walid Street may struggle for business in the hot summer months, Computer Plaza offers the consumer the chance to shop and choose from a variety of resellers in a mall environment.

Xmedia was previously based in a general retail mall, the Sahara Centre, but moved into Computer Plaza after business didn’t pick up, as Ahmad Farahani, general manager of parent company Ashley explained. “We opened for one year there but there just weren’t enough people going into that mall for IT. It could have taken two to three years to pick up, but why wait that amount of time? We are doing very well now we’re in Computer Plaza.”

Jacky’s however still has a shop in the Sahara Centre and is apparently doing considerably well. “We are being compared with Debenhams and Marks & Spencers which have huge, huge areas, but still our 4,000 square feet is number one in sales which shows you how successful we are,” Goyal said.

Farahani does not see this as reflective of the Xmedia store move though. “As a chain of stores, Jacky’s is still not an IT-focussed store.”

While Jacky’s does not solely sell IT, Goyal believes the company has a very strategic plan for each individual store. “We have made our own studies and we know what sells where. We have our outlets, and we know what kind of consumers visit there, so depending on the target market visiting that particular store, we have made our product planning. Jacky’s is the only place where you get to see maximum brands in IT being sold.”

It would seem that planning is the key with any future moves for the resellers and the retailers alike. It is also quite possible that the biggest threat to resellers similar to those on Khalid bin Walid Street may not be the super retailer services but the locations they choose.

“IT superstores, great, CompuMe they’re doing good business,” said Rae. “It has its own customer level, it has a corporate arm, which people assign quality and assurance too, and they have their own little niches, in terms of services they offer. At the end of the day from my perspective, superstores are pretty much where it’s going to be at.”

Agrawal said location was definitely something Jumbo would be looking at. “The location of the store is very important, there is absolutely no doubt. But what is it important for? Any future decision with regards to location we make, will take into account the product mix point of view, the demographics of people, and the location itself to help define the kind of margins.”

Farahani is undeterred by his experience. “Traffic is very important when choosing a location. We are now in a dedicated computer environment, but I think in the future I will be looking closely at the development of Dubai, before I choose where to locate.” ||**||

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