PRG takes byte at new store concept

By Phil Boeyen, ShareChat Business News Editor

Tuesday 4th September 2001

Retail company Pacific Retail Group (NZSE: PRG) is brushing off the recent departure of global PC giant Gateway from New Zealand as it prepares to launch the first in a new chain of 'category killer' computer stores.

The retail group is opening the first of its newly branded Big Byte outlets in Christchurch this week, with plans to open up to eight around the country in the next two years, depending on site availability. The second store will open in Palmerston North later in the year.

The outlets are replacing the former Computer City franchises, which are now being offered as a sub-category within Noel Leeming stores.

Big Byte outlets will offer a wide range of computers, telecommunications and related products, such as office furniture, games, digital cameras, software and magazines.

PRG boss Peter Halkett is obviously delighted with the new concept, which he describes as Computer City on steroids. In particular he says the stores will appeal to those wanting a full information technology service.

"All computer users from businesses to retired people surfing the internet, need their computer set up and operating seamlessly, but they don't always have the skill, resource or knowledge to do this and maintain it.

"We aim to make life easier for everyone, because all our services are in one place and we have a team of experts able to make technology available and accessible to meet anyone's computing needs."

Mr Halkett says one segment the company is aiming at with the new stores is small business users, which make up around 25% of computer sales in New Zealand.

"It's an area we haven't been getting into and yet it's very lucrative.

"As well, the characteristics of the small business market and the home market are becoming increasingly similar, with people now buying a second computer for home which they may want networked, for example."

Despite Gateway's departure Mr Halkett says the New Zealand technology market is robust.

"Gateway has never been profitable in New Zealand and I guess when things started happening in their home base they had to get rid of the things that weren't working.

"We're different from that. We've been successful here already and we can use our current scale as a launching platform for new initiatives."

Although not too keen to talk specific figures, Mr Halkett says once all eight stores are up and running they should add around $50 million to PRG's income.

He admits some of that business will come from existing Noel Leeming and Bond & Bond stores, although those outlets are aimed at a different market, with Bond & Bond in particular being marketed as a discount retailer with the aim of keeping computer sales at Warehouse Stationery (NZSE: WHS) in check.

There's good news for budget-wary investors in the new launch too, with Mr Halkett offering reassuring words that the new stores won't be eating up extra investment dollars.

"We generally spend pretty well the company's depreciation each year and we won't be going outside of that parameter this year," he says.

"If you took a good look at our annual report you would see that we have improved our cashflow management and at the end of this year we will have further improved it even though we are opening new stores like this."

PRG has around 97appliance, electronics, computer and homeware stores in New Zealand, with annual sales of over $400 million. It also owns lifestyle retailer Living & Giving and Pacific Retail Finance.

The group's full-year profit for the year ended March was $10.4 million, up from $7.7 million last year.

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