Jacky's to the fore

With the GCC consumer electronics market enjoying a period of unparalleled growth, retailers are working to capitalise on the multitude of commercial opportunities that have arisen as a result. Ashish Panjabi, COO of Jacky’s Electronics, discusses his company’s prospects.

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By  Ronan Shields Published  November 15, 2006

|~|Panjabi,-Ashish200.gif|~|Ashish Panjabi, COO of Jacky's Electronics.|~|Electronic Channel News: What sort of year has 2006 been commercially for Jacky’s Electronics? Ashish Panjabi: It’s been a good year for us, partly because of events such as the Dubai Shopping Festival and partly because we have expanded our retail network in the UAE, establishing new stores in Dubai’s Mall of the Emirates and Deira City Centre, and the Sahara Centre in Sharjah. We have also renovated many of our existing outlets, which has helped us gain a much greater return on our investments despite the stores retaining the same overall floorspace. When a lot of the stores were first designed the products we featured were quite different to those we stock today. Our new standard shop floor design enables us to better showcase new technologies such as LCD TVs and MP3 players that have been released on the market in the interim. Overall, sales have benefited greatly from these changes to our store design. ECN: At the moment there is a strong emphasis on aesthetics in consumer electronics product design. In terms of sales strategies, do you believe it is just as important for retailers to embrace new concepts in store design? AP: I believe so. You have to work hard to shape consumer perceptions by presenting them with a thoroughly modern and professional image, and store design plays a key role in this. In terms of the increased focus on aesthetics in product design – many consumers say they are primarily looking for top picture quality when purchasing an LCD TV, for example. However, I’d argue that that’s not always the main priority – some people just want something that looks sexy hanging on their wall! ECN: What is your impression of the current state of the consumer electronics industry in the Middle East? AP: I think the majority of businesses involved in the channel are doing well at the moment. Competition has increased in the form of new consumer electronics vendors entering the market, which is a development we welcome. They are shaking up the market and creating new business, which is creating a new degree of discipline across the entire consumer electronics channel. The effect of this is that retailers are also competing on a more even playing field. ECN: How has the trend towards hypermarkets stocking consumer electronics and household appliance goods impacted retailers such as Jacky’s? AP: I continue to argue that we’re effectively operating in a separate market [to hypermarket retailers]. Jacky’s targets a different consumer demographic to hypermarket retailers. I am in negotiations withall sorts of things. We stock many of the same brands, deal with the same suppliers and sometimes encounter similar issues with our partners. They understand that there are some vendors we work with that we they will never have dealings with and vice versa, and that there is a middle ground that we both have to fight over. ||**||New markets|~|Panjabi,-Ashish002.gif|~|Panjabi says Jacky's is considering regional expansion.|~|ECN: How has the emergence of the low-cost electronics market affected Jacky’s? AP: Our customers tend to favour medium- to higher-end products that also offer better profit margins. Ultimately, we cover our costs by selling the products we stock on our shelves. Hypermarkets stock a far more diverse product range that includes groceries and essential items. They specialise in consumer electronics products that offer lower margins. They can afford to do this because of the sheer scale of products they offer – their diversity guarantees their success. We concentrate on more service-entry products. These are the main differences in our respective strategies. ECN: What products have generated the most sales for your business over the past 12 months? AP: All products based on digital technology. I mainly attribute this to the rate of development of new technologies, which is shortening the lifecyle of most product categories in today’s market. Consumers are looking to update their mobile phones and MP3 players more often, due to the rate of technological development in both sectors. Many consumers own three or four iPods these days – nobody needs that number of iPods – but a lot of consumers in the UAE are always looking for the latest and greatest model on the market. We are starting to see a similar situation emerge in the notebook computer market. Many consumers who bought notebooks for the first-time three to four years ago are now looking to upgrade to the latest technology. They are demanding thinner and lighter notebooks with faster processors and mobile networking capabilities. Their tastes are generally becoming a lot more sophisticated. They also want to be able to connect a range of peripherals to the notebook such as a camcorder or an MP3 player. LCD TV sales have also boomed this year in comparison to 2005. I believe the FIFA World Cup created an increase in demand for these products locally. ECN: What would you say were the key emerging markets in the Middle East? AP: In respect to the Middle East, Jacky’s doesn’t have a presence outside the UAE. However, in the UAE, we have experienced an increase in demand for quality household appliances and consumer electronics due to the boom in the freehold property market. The result of this is that new homeowners are buying better quality appliances, which has stimulated demand for premium products in various categories. This has definitely had an effect on the kind of products we sold this year and I think this will have a follow on effect in 2007. ECN: Does Jacky’s plan to expand its operations in the Middle East? AP: We’re investigating a few options at the moment – we haven’t said no to anything – but we haven’t finalised any expansion plans yet. We’re always looking for the right opportunity; it’s a case of right time, right place. ECN: How does Jacky’s plan to increase its market share over the next year? AP: We believe that retail expansion represents a surefire way of increasing market share. Our new outlets in Mall of the Emirates have provided us with an important strategic base catering to the residents living in ‘New Dubai’. We also plan to heavily promote our two retail brands; Jacky’s Electronics and Jacky’s Express. Each brand caters to different consumer sectors. Jacky’s Electronics stocks a range of major household appliances and consumer electronics products, while Jacky’s Express stocks more funky and accessible products such MP3 players, mobile phones, digital cameras and digital gaming hardware and accessories. In the next 12 months we plan to open additional stores in New Dubai. We have already finalised a deal to open a store in the [yet to be completed] Dubai Mall located in the new downtown area. However I’m not in a position to disclose any further details about our other stores. I can confirm that we’re also considering further overhauling the design of our existing retail outlets to showcase a range of new product categories. ECN: Moving on, how do you think the new regulations on trade agency arrangements will impact retailers in the UAE? AP: The role of distributors in the consumer electronics channel has changed dramatically in recent years. Vendors now put a lot more pressure on their distribution partners to fulfil various requirements, including logistics support. We maintain a very positive relationship with the companies we deal with. As a retailer, we often receive input from both vendors and distributors in terms of marketing and strategic support. These days, distributors are better situated to provide services such as warranty support. In terms of the new legislation allowing vendors to break ties with existing partners in the UAE, I believe that if the vendor and distributor are both working towards the same objectives, then there should be no reason as to why they’d want to change that situation. ECN: Do you believe the industry’s current rate of growth in the Middle East is sustainable? Do you see any signs of a slowdown on the horizon? AP: Globally there is talk about a slowdown, but I don’t think that is relevant in this region. The economies of the GCC are booming and the influx of tourists means that 2007 should be a good year for all of those involved in the business. ECN: How do you feel about increased competition in the consumer electronics retail sector? AP: We thrive on competition. In the past when we have been negotiating a deal to establish a store in a shopping mall we have been asked if there were any stores we would prefer not to be co-located to. My response has always been ‘Whoever does not want to be next to us, I want our store to be next to theirs!’ Consumers demand competition in the marketplace. If we do our job right, increased compeition poses no threat to our business. ||**||

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