Tiny Computers has won a Powerhouse concession contract, which will see it open 140 new stores over the coming 18 months. This will almost double its store count from its existing 143 showroom-style stores and create around 450 jobs.
Andrew Walwyn, Tiny's MD, predicts this will allow the company to grow its revenue by £100 million, or around 30 percent, to £430 million (by sometime in the first half of 2003). More importantly, he believes the company will expand its UK PC market share to about 30 percent (from the existing 16 percent that it currently claims).
Tiny will open the first new concession on the 5th of November and will have 10 to 15 stores ready for Christmas.
This follows the story that the Register posted on Friday afternoon (The Time/Tiny concession battle), where we revealed that Time Computers would be pulling out of its Powerhouse concessions and opening a raft of new high street retail stores.
Interestingly Tiny says it beat out one PC retailer, which Walwyn 'assumed' was Time, and another non IT business, for the Powerhouse concession. Time says it was offered the deal and turned it down. There's also been industry rumours that Gateway was approached.
Tiny says it will keep on with its showroom concept, rather than looking at a fully stocked store. All the stores will feature the company's new retail design, as well as stocking more home entertainment products, in line with the existing stores. Walwyn also mentions that the company is considering various product line expansions, possibly mobile phones and DVDs, among others.
The announcements are a bold gamble for the company, especially in these market conditions. It will spend around £7 million to effect these moves and is optimistic in its projections from the new outlets, hoping for over £700,000 turnover from each one (making it just less than a third of the average from its normal stores). This is almost double what Time Computers' reportedly makes on its concession stores (our sources indicate its average at £400,000). Also, by not closing any of its existing stores and moving into all the Powerhouse concessions, there will be a fair amount of overlap of stores, further weakening sales potential.
Walwyn shows no concern for any of this, saying Tiny started to notice a market turn-around as early as June and has been improving slowly ever since. Regarding its revenue goals for the new stores, he remains confident, saying that its top concession store within Scottish Power pulls in about £950,000. As to the issue of store overlap, the company will just "give it a whirl".
A Time Computers statement says it wishes Tiny well in its new ventures, adding that it believes the company is overestimating the revenue generating abilities of the concession stores. It also mentions that Time did not bid for the Powerhouse contract, as its expansion into the high street stores has been in the pipeline for while now. ®