By Gavin Davids
Deepak Khetrapal has been tasked with turning around the UAE's oldest electronic retailer, Jumbo Electronics. It promises to be the fight of his career
Deepak Khetrapal is not a man to mince his words; this quickly becomes apparent within a few minutes of sitting down with him. “We were the undisputed best retail store and the best [that] people came to for electronics. But somewhere, the public perception is that Jumbo is not keeping up with the times,” the CEO of Jumbo Electronics says, in his trademark forthright style.
He’s not wrong, the former kingpin of the UAE’s electronics retailers has spent much of the last decade lagging behind upstarts such as the Al-Futtaim Group’s Plug-ins Electronix and Dubai’s Sharaf DG.
Desperate to keep pace, Jumbo’s board called in Khetrapal, a man with a reputation for introducing creative and intuitive strategies. He took over as chief executive of the firm in May last year.
“There was a certain realisation on the part of the board and the shareholders that perhaps the dynamism for which Jumbo had been known for has, in the last couple of years, been getting rusty,” he explains.
“That was the worry and the anxiety, and when I was brought in, I was told very clearly, ‘this is how we’re seeing things and this change has been made to take Jumbo back to its full glory,” he adds.
Jumbo was established by the late MR Chhabria in 1974 with a paid up capital of just $13,600. The firm became one of the UAE’s first multinational companies after it signed a deal with the Sony Corporation in 1975 to become a distributor. Today, the group is Sony’s biggest distributor worldwide, and a Middle East distributor for brands such as Acer, BlackBerry, Apple, Hewlett Packard, LG and Cisco.
In the year since Khetrapal’s appointment sales at the Dubai-based retailer have increased twenty percent, marking a 50 percent rise in sale volumes compared to the previous year. “We tweaked a lot of things and because of which, we actually clocked a growth of more than twenty percent in the market,” Khetrapal says.
With such a strong momentum of growth, there is no reason to believe that the company cannot continue with that success in 2011, he adds. Early signs indicate that the appetite in the market shows no signs of abating. The company is predicting eighteen to twenty percent growth in sales in 2011 compared to the previous year.
“In terms of total sales that we’ve completed, we’re closing to about $2bn of total sales in this market and neighbouring markets, as a group. [This] is not a small number, and I think, leads many retailers in our group by a large, large, amount.”
Despite the post-recession economy, there remains a high demand for popular electronics in the Gulf, a fact Khetrapal attributes to being in a market that is always evolving, which in turn keeps bringing customers back for more. The company’s results in 2009 back this theory. While most regional retailers saw a steep decline in terms of growth and sales, electronics retailers continued to show steady increases - diminished perhaps, but growth of any kind was something to be welcomed in such a tight market environment.
“Instead of growing by twenty percent, we grew by six to seven percent [in 2009]. There was still growth because we kept adding products. As a business, you cannot afford to de-grow. Luckily, we’re in a segment where there are always more exciting products in the market - new technologies come onto the market and consumers want more and more,” he explains.
One such example is what Khetrapal refers to as ‘the Apple effect’. Apple products were originally sold in Jumbo stores as a niche product but since Khetrapal’s appointment, the company’s marketing for Steve Jobs’ brand has undergone a complete revamp and now accounts for more than ten percent of the company’s sales across all its retail counters.
However, the danger of more technology being available on the market is that competitors start to take advantage, a fact that Jumbo Electronics knows all too well, having seen its market share eaten away by the emergence of the ‘big box stores’.
With the likes of Sharaf DG and Plug-ins occupying vast swathes of shopping mall floors, history shows that stores like Jumbo’s tend to get swallowed up by the behemoths. However, Khetrapal refuses to give in without a fight, and is determined that Jumbo will compete in an increasingly crowded marketplace on its own terms. “We’re handling the increased competition by not focusing on competition. We handle the competition by focusing on our internal competencies and strengths,” he says bullishly.
One fact that weighs heavily in Jumbo’s favour is its reputation, built up through more than 30 years in the industry. It’s an advantage that Khetrapal is keen to use in this dogfight, but not at the cost of surrendering Jumbo’s unique market identity. “We have our very unique strengths in the marketplace. Our long history here, the fact that we provide, without any doubt, the best-in-class service for our customers...I would say that Jumbo’s strength remains our customer service, our knowledge about the products we sell and our very clear vision on what we want to be,” he says.
“We do not want to be everything to everyone, we do not want to be the cheapest seller of products, like some other people keep claiming ‘you find it cheaper and we’ll give it to you for free’ - we’ll never make that claim.”
“Our platform is ‘value for money,’ it’s a good value proposition, and it’s backed by a service I don’t think anyone can match,” he adds. It’s an attitude that he wants to replicate in every showroom that Jumbo operates, and one that he’s not afraid of being proactive about fostering.
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Khetrapal says the most challenging tasks he faces is changing the mind-set of the company’s employees, many of who were quite happy to maintain the status quo. “Anybody who has been in the system [for a long time], starts taking some of the assumptions for granted, we don’t challenge them,” he says, “People may say, ‘oh, but this isn’t what Jumbo is like,’ and I say, ‘no problems, go, we’ll handle it.’”
One example, he says, was the pushing of Apple as a major attraction to shoppers. He initially faced an opposition from colleagues who had a different idea of customer preferences. But having seen the tremendous market for Apple across the world and in the Gulf, Khetrapal was in no mood to back down. “I was the only one saying, ‘go for it guys, it’s my risk, do it,’ and it worked. In the previous mindset of Jumbo, we might have been more diffident about it, more apologetic, now I don’t suffer that.”
Changing the mindset of a company that’s worth an estimated $1.5bn was always expected to be a difficult and time consuming task, he says, but one that he feels will be worth it in the end.
Other significant changes in strategy included a thorough overview of the group’s stores, which included careful examination of underperforming stores. Sometimes, this necessitates hard decisions being taken, but when it comes to the overall health of the brand, Khetrapal says that he needs to be clinical about the decisions he takes. “There are a few stores that I don’t think meet the standards that I would like Jumbo to keep up to. It’s not just about the store profitability, [it’s about] the customer finding the location attractive enough,” he says.
“We need to work with the stores that are working poorly, with the mall management, to bring the customer there. Despite all that, if you find that the customer profile of a particular mall is not quite what suits our business, then we take a call and say, ‘let’s move where the customer would prefer us to be,’” he adds.
With this in mind, there are already plans afoot to expand the brand’s presence into new markets. Abu Dhabi has already seen the opening of a new store in the Marina Mall. The 4,500 sq ft store is set to be the first of two outlets the company will open in the UAE capital this year.
In addition, the group plans to increase its focus on the GCC markets it already has a presence in. Oman and Bahrain are being eyed for possible expansion, though the current political turmoil could put those plans on hold.
Qatar, which is fast tracking a whole host of infrastructure projects as it gears itself up for the 2022 World Cup, is a market the company is looking to aggressively exploit, Khetrapal says.
Further overseas, the booming economy of India opens up a host of opportunities for the company. With eight stores already in operation, the company plans to launch a further four in 2011. With its eight stores all in Northern India, Jumbo is looking to push further into the country, with stores in Pune, Hyderabad, Bangalore and Chandigarh set to be launched.
Khetrapal says he is looking to exploit the brand recognition built up by the millions of Indians living in the Gulf, who have passed on the brand profile through word of mouth. Customers matter greatly to Khetrapal, and he sees the word of mouth they generate as a way for Jumbo to carve out a unique niche in the market.
With in-house studies showing the typical Jumbo customer to be discerning, Khetrapal hopes to leverage Jumbo’s reputation as a purveyor of the latest, high-end, high-quality electronic merchandise into a major drawing card. “Jumbo has a special relationship with discerning customers,” he explains.
“It’s not a customer looking for the cheapest product and it’s not that they’re looking at the low end of the segment. Jumbo’s strength is to be able to offer better price and better premium products to the market. The customer that Jumbo caters to, they’re tech savvy and they’re actually driving our own need to keep bringing in the latest models,” he says.
It is precisely for that attitude that Khetrapal was hired by the Jumbo Group. Having established a reputation as being someone who brings a fresh mindset to every company he has worked for, he says he’s in no mood to let something as minor as an economic crisis stand in his way of turning the company around.
“I think the most critical thing is to face the fact. You can’t run away from the facts. If Dubai is going through a certain phase, it’s going through that, you can’t change it. If there’s competition in the market place, that’s a fact of life. You face it and say, ‘okay, this is the market,’ [and] try to find some way around, create a way around or slowly, gradually, chip away,” he explains.
“Every time, your strategy depends on what’s in front of you. Many a time, what we see in front of us, we either don’t acknowledge properly, or we misread it. Which are, I think, two mistakes which, if we consciously avoid, we might be in a much better position to keep coming up with strategies which find you a way forward.”
The next step Khetrapal will take will be the most decisive in Jumbo’s future. Having taken the time out to examine the market and plan his strategies, he’s now ready to roll up his sleeves and get to work. And going by the sound of it, he’s ready for a fight.
“I think when you’ve been trained in a market that’s much more free-for-all and with much more bloodshed, you’re always a lot better prepared to leverage the strengths that Jumbo gives you. Having understood the DNA of Jumbo, I think now is the time we say, ‘what next?’”For all the latest retail news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
As long as the Middle East is flooded with inferior spec'd products from consumer electronics to cars, at markups which are disgustingly higher than similar spec'd products in North America and Europe, the local retailers will suffer and smarter buyers will buy online to fill this gaping hole.
Growing up here, I have seen little to no interest by the governments to set higher import standards for anything and really aggressively protect consumer rights.
If a retailer is reading this, they can stand out by setting those higher standards themselves, importing the best and supporting it with warranties. This would truly create and support local jobs.
Some small stores already do, and smart buyers know these places. I feel sorry for the poor sap who buys from the big stores here, they're ripping off people by selling last years technology.
Last year i got a samsung galaxy from carphone warehouse in the UK for 400 pounds or 2400 dirhams. The same one in UAE was then selling for 3200 dirhams. I also got a 60 pound refund which means it cost me 2150 dirhams.
Thats why i buy all my non essential purchases in the US or UK and not the UAE
There is no value for money from Jumbo. I had purchased a hp Laptop and it was under warranty. When I visited their brach, to change the battery, first they told battery is not covered under warranty. Thank God, my wife had already spoken to someone from hp official website and they had confirmed battery is covered under warranty. When I mentioned this and I will be complaining to hp head office, they agreed to change it. However, they had so much of procedures, which was making me fedup and the time they required was many days. I mentioned to them that I had come from Oman (to Dubai) to get this done.
Then I wanted to buy a battery from that outlet for cash, as I couldnt wait for so long to get their free battery. Since they didnt have or couldnt say when they can get, i bought it from outside!