Tesco Lotus lets consumers try out electronic gadgets

A great story on how Tesco is finally bringing an international level of customer service to Thailand. So why again is the Thai Commerce Ministry demanding that Tesco sign a memo prohibiting it from opening more stores? Is it better that Thai consumers buy electronics from sketchy retailers in rented stalls at the local market?

Test drive your gadgets

Tesco Lotus store lets users play around with the technology before buying

SASIWIMON BOONRUANG

A customer tests a mobile phone at Tesco Lotus recently. — PHOTOS BY SASIWIMON BOONRUANG

IT product displays that offer customers a chance to "look but not feel" are a thing of the past at Tesco Lotus Rama IV branch, which is revamping its IT section and introducing "try before you buy" counters where customers can test any product before deciding to purchase.

The IT section has a new look and has also increased the number of IT and consumer electronics items that it offers.

The Rama IV branch will pilot the try-before-you-buy concept with a range of brands and products, including phones, digital cameras, MP3 players and camcorders.

In the mobile phone area, for example, once a customer picks up an N70 Nokia, an LCD monitor on the counter will automatically show the features of that phone, with no need for assistance from counter staff. They could also test the sound quality of the MP3 players in the same way they listen to music through headphones at CD shops.

Sales staff are on-hand when needed though, explained Tesco Lotus CEO Jeff Adams. "The customer will get a neutral sales staff who won't be cheering for a particular brand because all the 30 sales staff are Tesco Lotus employees, not from the suppliers," he said.

Tesco Lotus CEO Jeff Adams says customers can see how the products actually work, touch them and check out the various features.

Once the customer decides on a product, they pick up a tag nearby the stand of that demo model to show at the counter, which will then provide a competely new item.

Adams said customers want to be able to check a product thoroughly before making a significant purchase, but often sales representatives simply show them the price and leave the product locked in the display cabinet.

"We know how frustrating this can be so we decided to give the customers what they told us they want," the CEO explained. "So here is the display where they can see the products actually working, they can touch them, check out functions and get a feel from them," he added, noting that this was the first service of its kind offered in Thailand today.

In line with the new display approach, Tesco Lotus has increased the number of products available, although Adams said pricing would remain competitive.

"We still position ourselves on competitive pricing plus value add because customers today are not concerned on price only," the CEO said.

The super store also plans to expand the IT shopping concept to a further 20 branches around Bangkok by early 2007.

Competition Meanwhile IT City, the pioneering IT retailer that today has the largest coverage area nationwide, will open four new branches. This will give it 30 branches by the end of this year - 13 in Bangkok and 17 upcountry.

IT City president Ekachai Sirijirapatana predicted that Thais would follow the US when it comes to consumer behaviour, although he noted that the market here was 10 years behind the US. [ed. IT City tends to focus on lower end products at very uncompetitive prices, and in terms of staff training and after sale support they are much more than 10 years behind the US]

"American people mostly buy IT products from modern trade or specialty stores such as Com[p]USA, BestBuy, Circuit City, WalMart, Costco, while such IT stores in Thailand account for around 15 percent of the overall market," he said.

Citing a report by IDC and the Association of Thai Computer Industry (ATCI), Mr Ekachai pointed out that home-use and small office and home office (SOHO) users was the fastest growing sector here. He said this group was more likely to buy IT and electronics products at a shopping centre.

He also noted that with a PC penetration rate of just 7-8 percent, there was still a lot of room for growth.

"IT City today concentrates on IT and IT-related products and our strategy is to be close to customers," Mr Ekachai said. [ed. IT City is one of the worst options for buying electronics in Thailand. It caters to totally clueless consumers, who just can't be bothered to figure out that shops next door sell the same product with better warranty for 40% less.]

Other competitors such as electonics specialist Power Buy claimed the new Tesco Lotus strategy would have little effect on its business. "We are now monitoring them to see how long it takes to work because Tesco Lotus has had to change an entire buying system," said Sa-angthip Amornchat, Power Buy vice president of marketing. [ed. no, they had to change an entrenched Thai mentality regarding the sale of consumer electronics, which is inherently more difficult but can be done (like other Tesco innovations) with appropriate and direct leadership. Good luck to Power Buy]

Founded in 1997, Power Buy started with home appliances and diversified into IT products several years ago.

Mrs Sa-angthip agreed that the IT market had big potential for growth and said Power Buy shops were also broadening. "We are not a hardcore IT store like IT City, we do not speak a technical language, but we talk to end-users generally," she said. The marketing VP noted that Power Buy had conducted in-house training for its personal consultants for over four years now. Consultants at all 72 branches nationwide have to pass training at its headquarters.

Among Power Buy's three major sectors - audio visual (AV), home appliances and digital IT - the vice president said that digital IT accounted for 45 percent of the total business and was the highest growth division. Notebook computers grew at 100 percent in the last year, while digital cameras grew at 20 percent and mobile phones 40 percent.

Mrs Sa-angthip said the digital revolution was still in the early stages, while consumers also have more purchasing power than in the past. "Unless the economic situation turns bad, the technology market will grow far beyond what it is today," she concluded.