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A channel under pressure
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A channel under pressure

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The retail challenge

Vendors, research houses and the media are quick to give their opinions on the trends and state of the ICT sector, but what is the reality for retailers? The Margin spoke to two Johannesburg-based retailers – one privately-owned and one part of a major chain – to gain some insight into life on the front line of technology retail.

Vendors, research houses and the media are quick to give their opinions on the trends and state of the ICT sector, but what is the reality for retailers? The Margin spoke to two Johannesburg-based retailers – one privately-owned and one part of a major chain – to gain some insight into life on the front line of technology retail.

Matrix Warehouse

Describe your business and what sets you apart.
Matrix Warehouse is a retail store that provides the latest IT products at affordable prices and combines this with the best service possible. Since we have a national footprint of 93 stores, we can offer this to almost everyone in South Africa.

What has been your best-selling category in the past 12 months?
Increasingly businesses and consumers seem to be taking to notebooks, and our high sales figures for this category clearly indicate that people like their smaller size and easier portability.

What has been your best-selling product in the past 12 months?
Our high-end notebooks – the Intel Core i5 and Core i7 – have been selling really well. It seems most people are now eschewing the cheaper entry-level machines as they’ve realised the multi-tasking and efficiency benefits high-end products offer, and are willing to pay more to get it.

What is not selling as well as expected, despite a big channel push?
We’ve found a lot of vendors trying to push all-in-one PCs, along with tablets, but the prices for these machines remains too high, so demand has remained low.

What has been the biggest surprise product?
We’ve seen an increase in demand for customised gaming desktops. More people seem to want machines that come in specific colours and are built up according to their specs.

What does your typical customer base look like?
Our customers generally fall into the LSM 7 to 10 segment, with around 70 percent being end-user customers and the other 30 percent being corporates and schools. Conversely, around 70 percent of our revenue comes from the corporate side.

What is the strangest question/request you’ve been asked by customers?
The funniest one was a chap who, after perusing our store for a few minutes, asked us where our beds were. When we said we don’t stock this type of product, he seemed quite confused and asked: ‘Aren’t you Mattress Warehouse?’

What are the biggest challenges you face in running your business?
Being in the IT space, our biggest challenge remains keeping up with technology trends. We have to constantly do research so that if a customer asks a question, we’re able to answer it intelligently.

Who is your business or technology hero?
Richard Branson, whose entrepreneurial skills are amazing. You only have to look at what he’s accomplished in his life, right back to starting his first business at the age of just 14.

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Direct Deals

Describe your business and what sets you apart.
Direct Deals was launched four years ago, followed a few months later by 24-Hours Only, which is our online business. The company was started with a particular retail mission – to ensure excellent and personalised service to our customers, which is facilitated by experienced personnel. Our goal has always been to provide the lowest price on every single item in-store.

What has been your best-selling category in the past 12 months?
In-store, laptop sales continue to be number one, closely followed by TVs; in our online store, the fastest seller appears to be external hard drives.

What has been your best-selling product in the past 12 months?
Talking specific products, our physical store has experienced a marked increase in sales of the Lenovo G580 laptop. Online, it has definitely been the Toshiba 1TB 2.5-inch external hard drive.

What is not selling as well as expected, despite a big channel push?
There’s no doubt that Samsung’s Galaxy Note 3 and Gear devices received a lot of hype and there have been some pretty big promotions trying to drive interest, but the attendant sales have not been there. We’ve received plenty of enquiries from customers, but I think these devices are comparatively expensive and, to date, we’ve not really moved a lot of stock.

What has been the biggest surprise product?
The Samsung 50-inch LED TV; there has been such great demand in the past few months, it seems to have wings and is flying out of our store. This has certainly been quite surprising.

Describe your typical customer
Our customer base encompasses a wide spectrum of demographics – while initially it was mostly male, we’re seeing a lot more women becoming more confident in making technology purchases. Generally speaking, we service end-customers, although we do service certain corporates that supply us with frequent orders.

What is the strangest customer question you’ve been asked?
A customer who had bought a laptop from us came back to the store requesting a new one. When we enquired what the problem was, he said his machine had been stolen and he expected to receive a new one because it was still under guarantee.

What are the biggest challenges you face in running your business?
Undoubtedly it remains the typical retail challenge of gross profit. It’s a competitive market. It’s particularly tough being an independent, because you’re up against larger retailers with significant buying power. Our offer to beat any price, while still taking on these big players, is definitely no easy task.

Who is your business or technology hero, and why?
Definitely Sam Walton, who launched the Wal-Mart empire, as he was a retail maverick with passion and innovation. Despite building a massive organisation, he remained focussed on the individual stores and always kept in touch with what was happening.

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