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Aggressive superpower or lucrative business opportunity? - PC Retail

Aggressive superpower or lucrative business opportunity?

The rhetoric employed to paint a picture of hugely powerful supermarkets swallowing up everyone else in the retail sector is certainly evocative enough to bring the plight of smaller retailers to the public's attention.
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But it's not necessarily accurate. Indeed, making a living in any sector is not necessarily dependent on sheer buying power alone.

Here are the facts. Figures from the Competition Commission's Provisional Findings Report state that Tesco has 1,920 stores operating in the UK, accounting for 26 per cent of retail market share nationwide (interestingly, Tesco's own figures are somewhat more modest at 1,600 in the UK and 12 overseas).

While investigative bodies have been far from shy to probe the supermarket for possible monopolies in other sectors, as yet the Competition Commission remains unconcerned as to its incursions into the PC and technology markets.

When asked if the Government body is planning to look into the issue, a spokesperson told PC Retail: "No – our remit has been to look at the groceries market and whilst there have been concerns expressed to us about other markets the supermarkets are involved in, out terms of reference limit us to groceries – which has been more than enough material for a two year inquiry."

Furthermore, market research consultant GfK claims that while Tesco et al have increased their share of sales in the PC market by two per cent (figures compare January to March 2008 with the same period last year), supermarkets as a whole still represent less than ten per cent of over all sales.

"Their impact on the total market at present is minimal," says Sean Fellows, account executive at GfK. "Traditional computer retailers and resellers remain the popular choice for anybody purchasing a PC, with the combined computer shop/office equipment retailer/telecoms specialist being the biggest selling channel with over 35 per cent of volume sales in the last quarter."

Economies of scale

Even taking that bigger picture into account, if you're a small independent retailer or reseller and you find out Tesco has just got the council's permission to build one of its 40-story, continent-sized megastores just up the road – you could be forgiven for glancing upwards in expectation of circling vultures.

However having a supermarket in your local area pumping out truckloads of cut-price PCs doesn't have to be negative factor for the small guy's business.
Indeed, many are relishing in it...

"I'd be tempted to open a computer repairer as close to Tesco as I possibly could," says Keith Warburton, founder of the trade body Professional Computing Association. "Its growing presence in the market will provide lot of opportunities as more and more of us are able to afford increasing numbers of an expanding range of digital services.

"They will need installing, tuning, fixing and replacing with something better. Customers will need advice from people they trust, and that isn't likely to be the girl who, yesterday, was working on the vegetable counter."

Small retailers won't last long if they take on Tesco head-on – that's true of any sector. However growing numbers of cut-price PCs on the market are providing business opportunities for smaller specialists. To this end, its easy to see why more and more retailers are seeing Tesco's ongoing expansion as a money-making opportunity – and not a death knell.

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