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Sun 5 Jun 2005 04:00 AM

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Show me the margin

IT vendors that fail to pay attention to maintaining retail margins risk losing shelf space according to Ashish Panjabi, chief operating officer at power retailer Jacky’s Electronics.

IT vendors that fail to pay attention to maintaining retail margins risk losing shelf space according to Ashish Panjabi, chief operating officer at power retailer Jacky’s Electronics.

“When you have stores located in high-rent shopping malls and have an organised retail set-up, invest in training and spend on marketing, you need the margins that can support all this,” explained Panjabi. “I think the vendors have now started to realise that if they do not pay attention to this area, there is no reason for us to deal with their product. It is as easy as that now. There are half a dozen other companies waiting to take that shelf space.”

Panjabi’s comments echo a growing trend in the mature Middle East IT markets for retailers to allocate a greater proportion of resources to promoting their own brand equity as opposed to the names of the vendors that they stock. Selecting the retail chain to purchase IT product from becomes more important in the consumer decision-making process, with the actual choice of brand once in the retail outlet taking on less significance.

“I think it is starting to happen now with all the retailers starting to put a lot more effort into promoting their own brand,” continues Panjabi. “Customers are buying the same product regardless of whether they visit a hypermarket, a specialist or a shop on Computer Street. Why do they go to one place over another? Each retailer has to attach value to their own brand as a retailer and the shopping experience they provide.”

The level of interaction between vendors and power retailer continues to grow as long-term product planning and sales strategies become a reality in the rapidly maturing market. Jacky’s is already sitting down with vendors to discuss their product roadmaps and plan specific promotions for major sales periods such as Gitex Dubai, scheduled for late September 2005.

The growing maturity of the IT retail sector — especially in markets such as the UAE and Saudi Arabia — is reflected in the scientific approach now being taken to store layout and picking the best retail format for each specific location.

“We now have different format stores,” added Panjabi. “For some stores in a high-rent location with high foot traffic, we will focus on stocking fast-moving products. We are also working on new formats that can be deployed in some of the new mall developments in Dubai.”

In terms of precise details of the new retail format, Panjabi is keeping his cards close to his chest: “It will be very different but I can’t say how because we are working on the agreement and talking to partners. We’re working on a concept that has already been successful all over Europe. We’re bringing that expertise over here now — we have spoken to most of the major retail projects coming up and they are very excited. We think it will change the way people shop over here.”

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