ATL looks downmarket for new business

Published: Wednesday | February 27, 2013 Comments 0
Ian Neita, assistant deputy chairman of ATL Group. - File
Ian Neita, assistant deputy chairman of ATL Group. - File

Avia Collinder, Business Writer

Appliances Traders Limited, a high-end retailer of appliances, has reshaped its business model to go after the market share of downmarket rivals Courts and Singer Jamaica with a hire purchase facility that offers credit terms of up to 36 months.

ATL says its hire purchase rates are below market, but did not state them.

Assistant deputy chairman of ATL Group, Ian Neita, said last Friday that the company, which had a 27 per cent bump in revenue last year, projects that half of volume sales in 2013 will be done under the new hire purchase terms.

"We are geared up to deal with as much as one in two customers who want hire purchase," said Neita.

"We expect, though, that growth will be gradual. We are geared to deal with up to 80 per cent of all sales," he said.

The company has rolled out financing for items ranging from water systems to kitchen appliances for the first time in its history, pumping up inventory by 30 per cent with new items which are intended for the targeted hire purchase market segment.

The offer includes credit for three to 36 months, no deposits for 18- to 38-month contracts, no penalties to close accounts early, and credit approval in three days.

The hire purchase programme extends to air-conditioning systems, a market in which ATL has dominated for more than four decades.

ATL is also extending financing to small businesses, allowing them to finance "high-value commercial equipment and solutions - a first for a retail financing programme", said Neita.

ATL has previously offered financing options to customers via a third party facility known as Easy Own. Under the current facility, however, the appliance company founded by Gordon 'Butch' Stewart bears the risk directly and has also expanded the financing options, the assistant deputy chairman said.

The company is targeting the lower- income market segment with the acquisition of new appliances, and expects at least 20 per cent revenue growth from the move.

"We expect at least a 20 per cent increase in revenue coming out of this push for financing in the first year. We believe we can achieve that very easily because we are not only providing the financing but also acquiring the goods to meet the market segment we are going after," said Neita.

"We are positioning to compete with Courts and Singer through acquisition of appliances, which are more suitable for that market."

The ATL executive said the shift in its model is driven by the realities of the downtrodden economy.

"We recognise that as the economy changes and people come under pressure, rather than defer purchases to when they can afford them we are allowing them to have the use of the appliances now and pay for them over the period," he said.

The Jamaican Government, in search of new revenue to buffer the Treasury, is phasing in a new J$16-billion tax package that hits both businesses and individual taxpayers.

Erode disposable income

ATL expects that the added taxes will further erode disposable income among its core market while imposing new expenses on its business.

"We do import the majority of our appliances; any impact on imports will impact us. It will also affect the disposable income of buyers," said Neita.

"Taxes obviously have a contracting impact, and the Govern-ment also represents a big customer for us. To the extent that the Government's expenditure is contracting, it will impact us as well, hence the need for an alternative means of funding."

The shift into hire purchase follows another initiative, an online shopping portal launched by ATL this year. Buyers through the online portal can also opt for hire purchase.

Neita says the interest rates on hire purchase vary according to the terms, but are set below market in an aggressive move to undercut competition.

The company, he states, also plans to increase its stores nationwide but is banking on its mobile store for now to increase its presence.

Upwards of US$1 million has been spent on the roll-out of the website and of a mobile store.

"That money covers the software, infrastructure for delivery, logistics capabilities and staffing. Directly, we have added 10 staff members. We have also acquired a vehicle that has been branded and will be seen all over Jamaica displaying our products and giving customers access via Internet and catalogue," Neita said.

business@gleanerjm.com

 


 

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