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Tough times ahead for the dealer channel

Tough times ahead for the dealer channel

Some industry experts are warning more independent retailers and PC dealers will be forced out of the market as tough economic conditions and the competitive climate take their toll.

Their concerns follow news last week that NSW-based retailer, SecretNet, closed its doors. In a statement posted to its website, company co-founder, Andrew Macks, said it would cease trading from its Bankstown shop and website on September 13. He blamed increasingly tough market conditions for its decision but stressed the company had not gone into bankruptcy.

“Things have been increasingly difficult the last two years for SecretNet. We have watched a large number of competitors, both friendly and hostile, strain and collapse. We’ve even seen some of our own distributors collapse under the changing marketplace that has now faced the industry,” Macks said in the company’s online statement.

SecretNet will continue to honour customer warranties. Macks said SecretNet had three permanent staff, not including management, before deciding to close. It has also put its property lease to December 2009 up for sale.

SecretNet was founded by Andrew and Paul Macks in 1996 as an online retailer of PC hardware and accessories and also custom-built machines. Macks told ARN it had found price competition from PC vendors a key challenge.

“We had to be sensible and look at the industry and notice the financial struggle that others are seeing [which we’re also seeing] and decide whether there were signs of things improving,” he said.

“The sad reality is there’s no way we can come close to the pricing of cut-price competitors. And although we were highly respected for our service levels, informative website and thoroughness in testing our custom-built machines, the price disparity was simply too great to ignore and we were always losing more and more customers.

“Sadly, we live in a world now where customers search on a price comparison site and choose the cheapest thing there – then buy it. Customer loyalty isn’t dead yet, but it’s certainly an endangered feature of this industry.”

SecretNet is one of many independent retailers defeated by the ongoing trend of declining margins, tough competition and slowing sales. Last October, Victoria-based retail chain, Computer World, closed up shop after accruing debts of $4.5 million, and was quickly followed by NSW-based reseller and assembler, Plus Corp, which called in administrators after seeing its sales figures halve.


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