INDUSTRY VIEWPOINT - PCs will be rolling in the aisles

Frank O'Brien, sales director at Fujitsu and head of the company's sales trial at Tesco, says Europe is ahead of the UK in retail PC sales.

PCs are no longer luxury goods - they have moved firmly into the realm of commodity items.

Bread, milk, fruit, a packet of detergent and a 350MHz Pentium II may at first sight seem to be a novel assortment to appear on a shopping list - but such lists exist and you have only to take a trip to Tesco to see for yourself. Supermarket trolleys piled with the regular weekly groceries and a PC are being wheeled through the checkout and into the car park.

'British consumers have been paying up to 40 per cent more for home computers than they would in Germany or France,' was a headline in The Sunday Times last June. Consumers in the UK began to understand that they were paying a staggering #267 more than their German counterparts for the same specification PC.

But as we know, it is not only in the computer industry that the market is held back by unrealistic margin retention through the greed of either the manufacturers or the retailers. It also happens in the car, clothing and music industries, to name just a few, so it is crystal clear why we have seen growth and success in mail-order companies, direct vendors and on the internet.

Direct selling has overcome the prohibitive retail model - so is this the way to go? We certainly are not advocating such dramatic action, as we believe there are other ways to attack the pricing issues and provide British consumers with a better deal. Fujitsu has clearly proved that through its PC sales at Tesco.

Supermarket sales of PCs are nothing new on the Continent. According to IDC, in 1997 alone, 295,000 PCs were sold in Germany and 253,000 PCs were sold in France through supermarkets. This 'alternative' channel is now an established part of the retail market in Europe.

We know that consumer PC penetration is growing fast. People are buying PCs for the home, businesses, education and much more and it is very important that we make technology more available. To do this, we must make PC pricing more competitive.

But, it must be current technology, not old chipsets and low-end components that manufacturers can buy on the cheap and then wheel out at dazzling prices. We need to raise the standard of the products on offer, as well as bringing pricing in line with other European countries.

In Germany, according to Inteco Research, there is a much greater level of PC penetration in the lower income bracket - 22 per cent, whereas in the UK it is as low as six per cent.

We have monitored customer feedback and uncovered some interesting results.

Consumers have reported that they find buying a PC in Tesco a less threatening and intimidating experience - the sales people are not on commission so there is no pressure on customers to make a purchase.

So what does the future hold? The gap is closing and we are moving closer to more competitive pricing. Over the past month, there has been a big rise in the volume of advertising for the latest and greatest PCs by the electrical retailers. But consumers should take care that they are not being lured into buying yesterday's technology, lower performance processors and a lack of upgrade options.

There are some interesting times ahead for the industry. For a long time, we have been predicting who will be the final winners. I believe that it will be the more innovative among us.