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IT retailers adapt to survive

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Local IT chain stores are shifting to a franchise model in a bid to survive. 

Comseven recently set up Mango Mobile.

They are also offering set-top boxes to capitalise on digital TV broadcasting and add a new revenue stream.

The moves are aimed at countering the declining sales of notebooks and PCs over the past couple of years, with tablets eating into market share.

The prolonged political unrest resulting in sluggish consumer spending has also caused at least 300 IT retail outlets to close down this year, while others are relocating their stores to cheaper locations.

Sura Kanitthaveekul, the chief executive of Comseven International, a leading IT chain store under the Banana IT brand, said IT retail chain stores need to adjust to the circumstances by increasing the variety of their product offerings to increase sales revenue.

The franchise model is an effective business tool to accelerate outlet expansion in upcountry areas with less capital investment.

Comseven recently set up a new subsidiary, Mango Shopping Co, with 20 million baht in registered capital in order to operate a new franchising model under the Mango Mobile brand.

"We plan to have 500 branches within one year of operation,” Mr Sura said.

Mango Mobile’s franchisees are required to invest one million baht to build a 20-square-metre shop to sell mobile devices supplied by the company.

At Mango shops, the company will allow mobile operators to set up a kiosk providing bill payment service and sell SIM cards and refill call credit.

Mr Sura said Mango Mobile has also allied with Kanatana to open iIT shops at all Kantana Cineplex community cinemas to expand its reach upcountry.

Mango also sells set-top boxes for Samart Corporation, priced 1,300 to 1,500 baht.

Mr Sura said the company expects to see revenue of 18 billion baht this year, up from 15 billion baht last year, which was a 12% increase over 2012.

He expressed concern that if the political unrest lasts until June, the country’s computer market is likely to experience zero growth, instead of a single-digit growth anticipated earlier.

The smartphone and tablet markets are expected to grow by only 10%, instead of the 20% projected previously.

Ekachai Sirijirapatana, president of IT City Plc, an SET-listed IT superstore, said the company plans to spend 150 million baht this year to triple the number of its IT City Mobile shops to 30 outlets.

“We expect our sales from smart devices to make up 30% of total revenue this year, up from 15% last year,” he said.

IT City reported a loss of 6 million baht for the first time in the third quarter of 2013, after posting profit over 17 consecutive years.

Wongsamat Sanpaychudayan, vice-president of Computer System Connection International Co, operating under the CSC brand, said the company expects 6 billion baht in revenue this year, up from 4.4 billion last year.

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