Alan Maughan has been involved with computers and electronics since the 1960s, long before Maughan Micros was ever thought of. When he lost his job as an electronics engineer for a company which sold Commodore calculators in 1973, he accidentally fell into selling computers for the first time: "I started up a partnership with another electronics engineer, servicing and selling calculators in the North-East. We saw the Commodore Pet at an exhibition in Germany and knew this was the start of something big. We later flew to Los Angeles where we met a rep from Commodore at an exhibition over there and signed-up to sell the Pet, mainly to education."
The business continued right up until 1988, when Maughan and his business partner went their "separate ways", and it was around this time both he and his wife decided to make their move into retail. They called their shop Maughan Micro Computers and leased a store at Europe's largest indoor shopping arena, the Metro Centre. The store size is approximately 1,500 square feet and is situated right in the heart of the centre. "We looked around at different sites, but decided on the Metro Centre because of the massive traffic flow and hype it was receiving. That and the fact that we would be near big-name stores which always helps increase the number of customers to any shop," says Maughan.
Maughan Micro Computers has proved an excellent success. When the Megadrive market took off in the early 90s, takings reached an all-time high. Although this levelled out, he still takes an average u12,000 per week, with the yearly turnover topping u700,000, mainly due to the demise of Commodore and Atari, and the fact that so many other stores in the Metro Centre are selling the same goods.
"This is supposed to be called competition, but many stores are losing millions by undercutting somebody else, yet still stay in business, this I call stupid!" exclaims Maughan. "Years ago everyone sold product at decent margins and made reasonable profits, so why have large retailers changed this policy and then realised they are losing money?"
Although he doesn't want to cut prices, to survive he has no choice: "If you do not compete on price, you lose out. We don't want to cut prices, because in turn that cuts our profit margin, but we don't want our customer share to die away either and that's what would happen if our prices remained higher than the competition.
And even though many of our products are reduced, we are still making a profit which is the most important thing if you want to stay in business," says Maughan.
Renting a site at the Metro Centre may seem like an ideal place to have a shop, but because of fierce competition from the chains, most of the indies have gone, as Maughan explains: "When we first came to the Metro Centre there were a number of independents doing very nicely, but since the big chains started to undercut everyone they have all but gone. There's only us and the Game Store left. The majority of their stock is second-hand and they don't sell much in the way of hardware. Leaving us as the only fully-fledged independent left here."
Many of the other stores in the centre are also now selling computer-related products hoping to cash-in on the new market. "Competition in the Metro Centre really is fierce. Just about every shop you can think of now sells computer-related products. In the early days of the centre there was only a certain number of shops in each segment allowed to sell certain products, but now there is a free-for-all. You can have two shops together selling the same products - all the owners of the centre are concerned with is letting unused units out," says Maughan.
The Metro Centre brings the advantage of high levels of store traffic, but it is expensive to rent there. Maughan Micros pays between u10,000-u20,000 per annum, but this is set to rise again. "With the rents set to go up yet again, you need to work very hard at the Metro Centre to make any money," adds Maughan.
The company has five full-time staff to cover the long opening hours of the centre, which is open seven days a week and until 9pm on a Thursday.
Maughan spends around u25,000 per month on stock for the shop, and sells all the normal items you would expect to find in a computer store, but also printers, monitors, memory and sound cards.
This complements the recently launched PC business. "Our shop-built PCs have been selling very well indeed. Even I was surprised by the number of people coming into the shop and ordering them. But we don't let people go home without support. If someone has a problem, be it hardware or software, we are only a phone call away."
When it comes to dealing with "bad" customers, Maughan has certainly had his share, but there's one incident he will never forget: "A customer came into the shop and bought an Amiga before Christmas one year and then brought it back two months later in a poor condition saying it was not what it was supposed to be. He demanded a refund which was reasonably refused. He did not make a fuss, but said he would take the machine away and contact Commodore, which he did and was given no joy. The next week he came with his son and some friends and stood outside the shop every day for a week with his Amiga telling anybody coming into the store that we had sold him a duff machine and not to buy from our shop," explains Maughan.
"Security at the Metro Centre moved him on but as soon as they had gone he came back. At the end of the week we used security as the mediators and ended up giving him a refund - we had no choice," says Maughan.
As regards to the future, Maughan says one shop is quite enough: "We do not have any expansion plans in the near future, running and managing one shop is enough. If you make enough money to lead a reasonable lifestyle, what's the point? Who needs all that extra hassle?" says Maughan.
Store Visited: The Metro Centre, Gateshead.
Store Type: Stocks brand new machines, refurbished machines, new and second-hand software and just about every accessory and peripheral you can imagine.
Owners: Alan and Georgina Maughan Manager: Stuart Marshland History: Following its opening in 1988, the company has maintained the level of turnover from the height of the 16bit market.
Customer Profile: A varied range of customers, on the whole affluent 20-35 year-old males with credit cards. A portion are also teenagers.
Growth Potential: The Maughans are looking forward to greater growth with their shop-built PCs and the arrival of the Nintendo 64, but are quite happy with one store.
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