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Thu 23 Jul 2009 04:00 AM

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In-store politics

Channel hears pitches from six leading vendors on the devices they claim will offer the retail channel guaranteed sales during the downturn.

In-store politics
In-store politics
Jai Bhatia, Sales Manager, Buffalo.
In-store politics
Amer Husaini, Consumer Business Manager, Dell.
In-store politics
Youssef El-Arif, National Account Manager MEA, Belkin.
In-store politics
Michael Luke, Sales Manager MEA, Parrot.
In-store politics
Tareq Husseini, MEA Sales Director, Sandisk.

What is it exactly that makes one retail product a stronger prospect than another right now? We listen to pitches from six leading vendors on the devices they claim will offer the retail channel guaranteed sales during the downturn.

The financial crisis has caused many a business to batten down the hatches. Nowhere is this more relevant than in the Middle East retail channel where there has been an immense amount of trepidation surrounding consumer reaction to the global downturn. The question that retailers have been asking themselves is: will customers cease spending altogether, cut down on non-essential products — which could be viewed as a category that a great deal of mainstream IT products fall into — or simply maintain their spending habits under the assumption that the region has been somewhat buffered from the situation?

One of the things that retailers need to count on at the moment is their own judgement of how consumer spending habits will migrate so that they can adapt their strategies to account for changing trends.

There are many factors to consider when making such dramatic plans, but it is absolutely true that product selection is perhaps one of the most important decisions an IT retailer will have to make today.

An appealing window display, attractive offers and the promise of great discounts may well entice the casual consumer into the store, but it is the selection of products — marketed in the correct way and with sales staff fully briefed on them — that will determine whether a consumer becomes a customer or simply walks out empty-handed.

Retailers must also have their fingers firmly on the pulse of popular culture to ensure that they can prepare for the latest consumer trends before they happen. Then there are the business considerations to take into account as well. What kind of margin is a particular product going to offer? What support will vendors provide in terms of marketing and sales training? Does it fit with the existing product portfolio and will it add value to the overall offering? And lastly, does it offer significant up-sell opportunities?

If the answer to all these questions is ‘yes’ then — more than likely — the product is going to be worth the investment.

It is vitally important for vendors to bear in mind what retailers expect from them as well. It is all very well producing the fastest computer, the best-looking notebook or the highest capacity disk, but that becomes irrelevant if they have failed to understand the needs and priorities of the retailer.

At the end of the day, shelf space is rightly of a premium and vendors have to prove to retailers why their products are worthy of the costly real estate that houses them.

With that in mind, we cornered a selection of vendors who claim they have products which will stimulate customer spending. Over the coming pages they explain exactly why their products are worth the Middle East retail channel’s time and investment. Buffalo

Buffalo claims to be at the forefront of home networking innovation, boasting a product range that instantly syncronises — due to the firm’s AOSS technology — and allows anywhere access to home-stored data.

What product do you offer that is ideal for retailers right now?

Jai Bhatia, Sales Manager:The Buffalo High Power Infiniti Router. It also has AOSS technology, which means it can instantly configure with any other Buffalo home networking product.

What is the key selling point that sets this particular product apart from the competition?

JB:It is definitely the range that it has and the AOSS feature, plus it offers a gigabit ethernet. We also have web access where you can access any of your storage devices on your network from where ever you are in the world. You don’t need a static IP, you just need a basic internet connection and this router. Then you just need to connect your hard drive to this router and you can access it from anywhere. Retailers are feeling the effects of the financial crisis. Why should they invest in this product?

JB:If you look at the home theatre market and you are going for the professional systems it will cost you no less than around US$5,200. Buffalo provides a one-stop solution that is much cheaper than that. Buffalo offers a group of technologies that performs a variety of facilities for the end-user. From the retailers’ perspective, there is a huge opportunity to add on other Buffalo products and therefore make greater margins. The High Power Infiniti Router is one of those products and via the AOSS technology it links up with many other Buffalo products. It helps the end-user make their home wireless.

Power retailers are looking for good margins and innovative products to offer to the clients. That is what we offer them.

Can you give an indication of the margins that retailers can expect to make from selling this product?

JB:The margins are good because the customer is willing to pay and they get better technology in the products. It is an offering that no other vendor can provide. Dell

We might be in the depths of a financial crisis, but if PC manufacturer Dell is to be believed then style and aesthetics should not become collateral damage to the downturn.

The vendor has long been making headway in the IT style stakes and also insists that there is still a very strong market for mid- to high-end notebooks, making a balanced offering from the retailer’s perspective essential.

With that in mind, the vendor has recently rolled out its Adamo high-end notebook, a stylishly crafted machine with a metal chassis, but still lightweight and supposedly the thinnest on the market to date.

The question that retailers will have to discern when considering whether to add the Adamo to their range is if a notebook that looks set to challenge the MacBook Air in the design and heaviness stakes will spark enough interest in the end-user to make them pick up a box and head straight for the cash desk.

Dell is convinced that it will and that there are plenty of consumers who will respond positively to the Adamo’s trimmed-down style.

What is the product?Amer Husaini, Consumer Business Manager:The Adamo is our latest notebook. It is about design, functionality and aspiration. It is aimed at people who want to express themselves with style.

Who is the target end-user?

AH:People who want to mix self-expressionism with technology. So, at the same time, we have incorporated both into one design. It is all metal, very slim and we have an SSD hard drive and software enhancements. At 0.6-inches, this is the thinnest notebook in the world.

Retailers are feeling the effects of the financial crisis. Why should they invest in this product?

AH:It is always a good to have different segments and different offerings in the market place. There is always a consumer demand and a consumer need. Today, even if you think about economic needs, this region is not as challenged as some are globally and there are still demands for products such as the Adamo in the market. What margins can retailers expect to make from selling this product?

AH:I am not going to comment on that. Belkin

Cross-selling opportunities from Belkin are expansive as the vendor offer products ranging from iPod covers to data centre solutions. One particular factor that the vendor claims may sway the more prudent consumer right now is the extensive warranty offering provided on its products.

What is the product?

Youssef El-Arif, National Account Manager MEA:Our N1 Vision Wireless Router. It is a higher-level technology but the price point is quite low. It is a newer technology and the best feature we have on all of our products is the fact that we offer a lifetime warranty.

Who is the target end-user for this particular product?

YA:The home user. It is not aimed at the SMB or the enterprise because it is a home user router that has a range which goes up to roughly 300 metres. Retailers are feeling the effects of the financial crisis. Why should they invest in this product?

YA:In the current situation, consumers are looking for the best deal. They want a product with high specs, a high performance and a better price. The same thing stands for the retailers who want access to better products and to differentiate their product range from competitors. They also want good margins and to sell out higher volumes, and faster, as well as adding value to whatever they are doing. The N1 Vision Wireless Router is a pure retail product because it has higher performance, a lifetime warranty and the price points are very low. Can you give an indication of the margins that retailers can expect to make from selling this product?

YA:We do not fix our end-user prices because most of the retailers prefer to work on their own specific margins, so we cannot impose the margins that we want on them. If you go to the retailers that are based in the malls, then their margin is definitely higher than resellers that are based elsewhere. Each one works on a specific margin, but our product is a high-margin product even though the end-user price is competitive. Parrot

Paris-headquartered Parrot makes a range of audio and visual peripherals from sleek digital photo frames to teleconferencing systems, all products that will add new SKUs to a retailer’s shelves. The company selects the Parrot MiniKit — a sun visor-mounted car phone kit — as a product that will be a revenue-generating addition to any retail portfolio.

What is the product?

Michael Luke, Sales Manager MEA:The Parrot MiniKit and the Parrot MiniKit Slim.

Who is the target end-user?

ML:For these plug and play products I would say that we are looking at the mid-level consumer, what I suppose would be the ‘middle class’ consumer. It is a mainstream product and anyone driving a car is a potential customer. We are also trying with our distributor here in the Middle East, Almasa, to maximise the potential of the corporate market.

Retailers are feeling the effects of the financial crisis. Why should they invest in this product?

ML:We have other items that are perhaps not suited to the financial crisis if someone is looking carefully at their wallets. But with this model that goes on the sun visor I think it is really a necessity item for people to keep their hands on the wheel and their eyes on the road. People without these type of devices, if they get caught, can get a fine. If I am correct in saying that the UAE is about to implement a law fining people 5,000AED (US$1,300) for using a mobile phone while driving, then I think US$68 to avoid this is not a huge investment. In the retail stores, we are trying to maximise the exposure of our products and we are implementing demo units so that the retailers are able to better demonstrate the product and point out its unique features. What potential is there for up-selling and adding value to this product?

ML:What we try to do is find mobile retailers where we can actually attach one of our kits to a telephone that is being sold.

Can you give an indication of the margins that retailers can expect to make from selling this product?

ML:This particular product offers about 30% to 35% margin for the retailer. Sandisk

Fresh from signing a distribution agreement with Redington Gulf, Sandisk is determined to launch a concerted effort in the retail IT accessories space. The partnership with the volume distributor — which has a long history in retail-focused wholesaling — should ensure its products make it on to the shelves of prominent retailers in the region.

From a retail perspective, Sandisk boasts a relatively strong proposition due to the fact that it offers solid up-sell opportunities from which retailers stand to make strong margins and boost dwindling hardware sales.

In fact, the vendor is keen to point out that consumers are more likely to shell out for peripherals in the middle of a financial crisis than they are new laptops or computer systems. It also points out that, although times are tough, the average businessman will be loathe to risk the integrity and security of their data so Sandisk can offer them an easy way to instantly back up. What is the product?Tareq Husseini, MEA Sales Director:The Ultra Back Up USB Drive is the latest product that we have in terms of portable storage and back-up. It ranges from 8GB to 64GB and is very easy to use and comes with software. You just push the button to back up in an instant. Any ordinary USB drive could take hours to upload or download 32GB of data, but this is at 15 megabytes per second so it is at least three times faster than anything else out there in the market today. It is aimed at the business user that is backing up their notebook and for home users that have movies and lots of digital files.

Retailers are feeling the effects of the financial crisis. Why should they invest in this product?

TH:At the moment, we see that our products are still being bought. End-users still have the cash and the time to buy sub-US$100 products. They are not buying new notebooks, but they are buying accessories with the little money that they have to spend on IT. We try to emphasise to retailers that the only way we can all make money is to drive the end-users and up-sell. That is what we offer retailers, the opportunity to up-sell from a US$10 or US$15 to a slightly more expensive product.

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