IT retailer Challenger in aggressive expansion

It plans more 'superstores' and eyes online market

IN the cutthroat consumer IT market where sales margins are often razor-thin and price slashing appears to be the order of the day, Challenger Technologies plans to go against the grain with a multimillion-dollar expansion in the pipeline. On the cards are more retail stores, overseas franchises and a second attempt at online shopping, its chief executive Loo Leong Thye told BizIT in an exclusive interview.

The locally-listed company, which operates two IT superstores selling everything from PCs to printer paper at Funan Centre and Tampines Central, will add four more outlets to its name by the year's end.

A new shop front will open its doors at Eastpoint Shopping Centre later this month, and another is to follow at United Square in October, Mr Loo said, adding that two more are set to be unveiled by the end of the year.

Going all out: Mr Loo says the push is needed to drive sales volume, especially for products where margins are thin

While he did not reveal the total amount Challenger has earmarked for expansion, Mr Loo said that each new store represents ' a million-dollar investment'.

Besides opening more Challenger megastores, the company will also widen its network of so-called small format shops which specialise in desktop and notebook sales. The company currently owns two such 'Matrix IT Gallery' shops in Funan Centre. A third will open in the gadget shopping haunt of Sim Lim Square in coming months.

According to Mr Loo, the aggressive retail push is needed to help drive sales volume, particularly for products such as PCs and laptops where profit margins are as low as 'single digits'.

'With volume, we can then go to the vendor and negotiate for better deals,' he explained.

Besides beefing up its physical retail presence, Challenger is also branching into the online realm in a bid to build customer loyalty and encourage repeated purchases.

'As the market gets more competitive, we've got to do something that's different from other people. We've got to try and engage our customers and lock them in,' Mr Loo stressed.

To do so, the firm last week launched an online auction site dedicated to its base of nearly 100,000 members. Like eBay and Yahoo, the new portal (www.eauction.sg) allows visitors to bid for IT gadgets such as notebooks, handhelds and digital cameras at heavily-discounted prices. However, the company's flagship auction site also offers a 'buy it now' option where users can purchase an item without bidding for a set fee.

'We are offering them (members) products at very competitive prices and some are even below cost,' he said. The main aim of the auction portal is not to improve sales but to increase Challenger's membership base. It also serves as an incentive which comes on top of existing perks like membership discounts and loyalty points redemption, Mr Loo added.

Beyond auctions, he disclosed that Challenger is also set to take a second shot at online shopping, having launched and subsequently halted a similar effort during the days of the dotcom boom.

This time round, the firm's online shopping site, slated to be operational next year, will only feature a selected range of products like recording media, printer ink cartridges and computer accessories. Delivery services will also be thrown into the mix, Mr Loo said.

The expansion effort will also be extended to neighbouring countries like Indonesia, Malaysia and the Philippines, where the company is on the lookout for potential franchisees of its Challenger superstore concept.

'Franchising is a safer bet. We teach (franchisees) how to run the business and if they do well, we'll take an equity stake,' he said. 'It's a more prudent and calculated way of expanding compared to going in and opening a new store, which runs quite a big risk,' added Mr Loo.