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Weekend: Britain's computer retail revival

PC crash fears unfounded, says PCA's editor

A cursory glance at the headlines in the national press and you'd be forgiven for thinking that all computer-related companies are headed down the toilet of economic recession.

But while that may be true of US-based computer firms, two of Britain's biggest PC companies — Time and Tiny — are ploughing money into retail, that other supposedly unfashionable and unprofitable area of business.

Laughing in the face of pundits who say high street retail is dead, Time and Tiny have announced bold moves in this sector, displaying widely differing strategies. But both show the UK computer scene is still as lively and competitive as ever.

That's good news for UK consumers and small businesses who are in the market for new PCs and peripherals, because it will mean greater competition for Dixons' PC World chain, lower prices, more choice and — we hope — better service.

Tiny, arguably Britain's largest indigenous PC maker, is taking the biggest gamble, doubling the number of retail outlets it currently has — 143 — by opening store-within-store concessions in 140 Powerhouse stores, most of which are in out-of-town locations.

At the same time, Tiny is overhauling the appearance and content of its stores with funky window displays and adding consumer electronics and DVDs to its staple stock of peripherals and build-to-order PCs.

Furthermore, while US computer companies are bailing out of their Irish and Scottish manufacturing bases faster than you can say 'burst technology bubble', Tiny has moved production of its PCs from the Republic of China to Prestwick.

Fullarton Computer Industries, the company contracted to make Tiny's PCs, turns out 1,300 machines a day, creating 160 new jobs at the plant in the process. Tiny added another 100 new jobs at its customer support and technical service centre in Redhill, Surrey.

The retail developments alone will cost Tiny in the region of £7m, a sizable investment for a company which turned over £330m from selling just over 400,000 PCs in 2000. But it aims to generate another £100m in revenue from these shops and has ambitions to be a billion-pound organisation by 2006.

Tiny's Lanchashire-based rival, Time, recently gave up the Powerhouse concessions and is moving to high street locations from out-of-town retail parks.

According to Time, the average Powerhouse store turns over £1.2m a year and, when Time had them, the concessions earnt about £400,000. If Tiny is to add £100m to its turnover from the 140 Powerhouse stores, it will need to average £714,000 per concession.

Similar to Tiny, Time's retail outlets are currently more showroom than shop. Customers review demonstration PCs which they can then order for later delivery.

But while Tiny is expanding into consumer electronics, Time shops will be stocking consumables, high-volume, high-profit items like printer paper and ink cartridges — hence the need to have shops in primary retail sites subject to 'high footfall' (retail jargon for busy high streets where the maximum number of people will pop in).

Selling a PC may be more spectacular than a packet of paper in terms of price tag, but though the profit on a PC might be eight to 12 percent, consumables can be marked up 400 percent or more. The number sold in a day and the ease of selling them makes computer consumables very attractive for retailers.

The other function of Time's stores will be to provide a local upgrade and repair centre, emulating the friendly independent high street computer dealer.

Currently, Time customers wanting to contact the company have to phone its call centre in Burnley — and we all know how frustrating call centres can be. To effect a repair or upgrade customers have to send their PCs back to the manufacturing plant, also in Burnley.

But Time's move from out-of-town premises to the high street will see repair and upgrade responsibility pushed down to local level.

The advantage for Time's customers is that the salesman in the shop 'owns the customer' — retail jargon for having to face up to the customer if the machine comes back.

The advantage for Time itself is that it means salesmen can 'establish a relationship with the customer' — retail jargon for gradually selling them more stuff than they originally thought they wanted.

Time and Tiny are both switching from concentrating on selling to first-time buyers to selling to a more experienced audience of small business and subsequent buyers.

They may have very different strategies when it comes to retail, and inevitably they will end up competing fiercely for UK market share. But that will be good for UK consumers looking for low prices and a high degree of support.

US computer companies who have backed away from Europe will find it a very different place if they ever want to return.


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