Escom (3) - Gateway 2000 not keen on retail route

Gateway 2000 UK marketing director John Shepheard today dispelled rumours that the direct seller would venture into retail by picking up some of Escom's leaseholds. The firm was linked by tipsters who pointed out that it had recently launched a high-profile Covent Garden, London showroom.

"Both the problems that face the industry have the word 'stock' in them," Shepheard said. "[Analysts] over-inflate then knock down companies' stock prices, and managing stock inventory is the most important thing in controlling a technology company. In retail you hold stock for 60-90 days and it's like a money metre running out when things like the price of memory falling happen. I think the Escom problem lay fundamentally with problems in the retail model.

"Dixons are doing better than Escom because with superstores like PC World you've got more of a chance, they're like 'PC Direct' or 'Computer Shopper' with bricks and mortar."

Shepheard said that even the showroom experience and advantages of being a direct seller with the ability to turn over stock quickly wouldn't tempt him to try the retail route. "We've seen a quadrupling of visitors to our showroom recently and you get some great advantages meeting your customer, but I have a problem trying to imagine running a retail business like that alongside a direct business - it's like running two sets of books."

However, Shepheard agrees with the opinion being widely voiced today that a PC vendor could decide to enter the UK retail market now, taking on some prime former-Escom sites: "I think it's a strong possibility but it's too early for us."