Niche strategy bolsters profits

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Neelesh Bhatnagar

UAE-based Emax has reported impressive surges in its first-half revenue as buoyant demand for consumer electronics swelled the chain's bottom line.

The company, which currently operates in the UAE, Qatar, Oman and Saudi Arabia, intends to open 40 outlets across the region and in India by 2010.

Established in 2005, Emax is the multi-branded consumer electronics store concept from The Landmark Group. The company recorded revenues of AED200 million (US $54.5 million) in its first-half operations in the region, including AED100 million ($27 million) in its UAE operations, with sales predicted to leap 150% by 2008.

In an exclusive interview with Retail News Middle East, managing director Neelesh Bhatnagar reveals the new openings will be come in two formats: mall-based and its Big Box concept.

The success of the first Big Box in Sharjah - claimed to be the Middle East's biggest electronics store at 135,000ft^² over three levels with more than 100,000 electronic, digital and electrical products - has spurred the drive.

However, Bhatnagar's plans to ratchet up investment in existing outlets, expand the group's store portfolio across the Middle East, and enter into new markets are backed by its managing director's ambitious strategy to reform consumer attitudes in the region.

"Right now we're concentrating on expansion within the GCC, with Saudi Arabia representing more than 60% of the market and a lot of potential because of its younger population," he says.

"Despite competition from catalogues and online retail, shopping looks set to remain an extremely popular source of entertainment among the population in Saudi Arabia."

Shifts in the retail landscape such as increased commercial pressure from the rapid influx of international hypermarkets has forced Bhatnagar to tighten his grip on the category and sign up for inclusion at exciting retail destinations including Dubai's City of Arabia.

"Today we are witnessing more competition from hypermarkets than from other electronic retailers, particularly from chains including Carrefour, Géant and HyperPanda in Saudi Arabia."

In a bid to change consumer habits, Bhatnagar is aiming to inform them that electronics retailing "is not hypermarket business" and that specialised stores keep up with trends.

"There is a difference in philosophy between the non-food division of a hypermarket and a specialised store such as Emax, offering niche products and premium items, so whatever is the latest on the market, we will have it first.

"Our stores are of an impressive size, and very different from hypermarkets in terms of layout and shop fit, and we carry more niche products and top end models such as bigger sizes of LCDS and plasmas."

Providing ‘complementing categories" is central to Emax's future approach, in a bid to deliver an improved experience to consumers through add-ons.

"There would not be a shift in our strategy for these new openings, but if we have the largest display of computers, laptops and accessories then we want to balance that with paper and stationery."

The move will also be carried into the chain's household portfolio, with products including ironing boards and hangers promoted as add-ons to washing machines, dryers and irons.

"We want to sell a complete activity, with offerings required to perform a certain function, as this will prevent shoppers going from destination to destination."

The managing director is prioritising cost savings and productivity in his future plans for "smart retailing", with a firm focus on customer service training and recruitment of qualified, efficient personnel.

The chain stresses the availability of multilingual staff, conversion services from video to DVD and music ripping, and product delivery and installation by trained crew at its stores.

"We are also looking into entering the distribution business for electronic products and appliances," he reveals.

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