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Sun 10 Aug 2008 04:00 AM

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Plaza traders must think laterally

News that traders in Dubai’s Computer Plaza are looking to expand their business by opening outlets in up-and-coming parts of the emirate would seem a logical step given the ever-changing business climate they are facing.

News that traders in Dubai’s Computer Plaza are looking to expand their business by opening outlets in up-and-coming parts of the emirate would seem a logical step given the ever-changing business climate they are facing.

But it is a move that will require plenty of careful thinking if they are to avoid running into the same problems currently causing them distress.

Computer Plaza, or the Al-Ain Centre as some might also know it, has, over the years, made its name as the place to go to source PC hardware, particularly when it comes to laptops and mobile products.

Although many traders in the Plaza insist the present volume of business they are seeing remains acceptable, there is an admission that a number of external pressures are forcing them to investigate alternative ways of safeguarding their future.

The backdrop of uncertainty confronting them is due to several factors, not least the harmful impact that spiralling rental fees has had on fixed costs. Rent hikes are a threat for all retail businesses, especially ones built on modest sales margins.

Congestion issues are hampering the Plaza’s ability to pull in footfall too. Some shop owners say the tourist trade that previously constituted a hefty chunk of their revenues has eased off, leaving commercial traders — which ultimately drive a harder bargain — from Dubai and the neighbouring emirates as their most common customer-type.

And, of course, there is the small issue of mall-based retailers snatching an increasing portion of consumer wallet-share — although this is not so much a bone of contention for Plaza traders as the favourable prices that these companies are afforded by vendors.

Huge discrepancies between the prices and promotions extended to power retailers and those offered to Plaza traders is breeding angst and ill feeling among the latter. Rightly or wrongly, they perceive it as evidence of a diminishing role in the vendors’ channel ecosystem.

Bearing all this in mind, talk of traders replicating their model in areas of the city more inclined to attract tourist traffic, and where an affluent residential population surrounds them, is not only inevitable, but perfectly understandable.

It is a step that traders must think through properly though, because simply recreating an identical set-up in a different part of the city won’t stop the same problems arising.

It might guarantee them a new audience, but if their game is based purely on volume and availability there is a very high chance it will quickly implode. For a start, the mall-based buying culture is unlikely to lose momentum because your standard consumer desiring a mobile PC or an LCD monitor is quite accustomed to buying this way.

Certainly, Plaza traders located in heavily populated areas might stand a stronger chance of exploiting the convenience factor by touting themselves as ‘local IT suppliers’, but that alone won’t be sufficient because a mall will never be too far away.

They need to be doing what the mall-based IT retailers haven’t yet done particularly well — put the emphasis on the services they offer, rather than the price of a box.

In very basic terms, this means marketing themselves as places for consumers to go when they require professional assistance with repair, maintenance, installation or integration. This is something they probably do already, but not in a transparent way that can be easily digested by the consumer. They need to look at making these services more visible and price them in a way that is immediately apparent to the consumer. Introducing that element will, invariably, bring the product sales with it.

Plaza traders may instinctively feel that expansion is the most effective way to guarantee their survival, but if they don’t re-establish their value proposition they will merely invite the same problems that are prompting them to spread outwards in the first place.

Andrew Seymour is the editor of Channel Middle East.

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