Dealer Profile - One Step Beyond: Where There's A Will

Will Copeland might be one of the little people, with just one computer retail outlet in Norwich, but One Step Beyond has kept true to its name and stayed ahead of the competition, he tells Drew Cullen

Will Copeland is the managing director of One Step Beyond, a #2 million Norwich-based computer retailer, and chairman of the Network Buying Group. He trained as a librarian and lived in a hippy commune in Wales for three years. He is 46 years old and divorced.

I have always been a retailer. I just love piling everything high and selling it cheap. I started off in 1982 running a bookshop in Ipswich, but it didn?t take long for me to fall out with the owner.

The day I handed in my notice ? it was 1982 ? a customer walked in and offered me a job running one of his shops. He was a gentleman farmer who had put some of his family money into Brainwave, a start-up computer retailer. He was a very nice man who relied on advice for his investments. And he thought computers were the thing to get into.

He ended up with four outlets, but it was a classic case of running before you can walk. Christmas 1983 was a bad time for retailing computers. The Sinclair Spectrum was a key product and problems with its reliability put a real dampener on the market. At Brainwave we had 110 Spectrums, only eight of which were in saleable condition. The rest were faulty in some way.

In 1984, all the computer retailers went bust, including Brainwave. But I thought I could make a go of it. I bought the Norwich shop, mainly because my wife was studying at the University of East Anglia. I renamed it One Step Beyond, as I wanted something that would suggest the future. But I did not want ?computers? in the title, in case I ended up retailing products like satellite TV systems.

It turned out to be a good choice ? I nearly went for Silicon Carne or Efficient Chips. People in the industry always remember the name ? and there is a high recognition in the area. We?ve had some city buses completely covered with OSB branding. And our delivery van is a mobile advertisement. It whizzes around the city with One Step Beyond on the side in 4ft-high letters.

At the beginning, there was hardly any money. I used to put the stock in one cupboard and the empty boxes in another to make it appear our store was full. In the early days we carried the Amiga, the Oric, the Jupiter Ace ? you name it, we sold it. We struggled through this early period, largely because we were computer experts ? and our competition was not.

We would go down to Sinclair every week with 10 faulty Spectrums and take another 10 from a huge stockpile of returns that the company ? which was in the process of going bust ? could not afford to repair. We would get six of them working by which time another 10 duds would come in. So down we would go to Spectrum and pick out some more machines to cannibalise. I used to pray that we didn?t pick out any of the crap we had dumped on the pile.

In 1986, the Amstrad PCW and the 1640 came along, and we opened a second store half a mile down the road dedicated to PCs. This was one of the best decisions we have ever made. While other indies were dabbling in PCs to supplement their Amiga business , we developed expertise in this area. In 1992, we folded everything back into a single retail outlet in the centre of Norwich.

This is a 2,000 sq ft store with 50ft frontage, and it is effectively two shops in one. You have to differentiate games and PCs in some way. With One Step Beyond, the customers have to walk on to the street to get between the two departments. Many indies failed because they tried to sell the 1640 next to the Commodore 64. The kids dislike the atmosphere you need to sell PCs because it is too po-faced. I like our games department to have a bit of noise. We have MTV and 16 display units running all the time.

The PC department is, in contrast, a haven of sanity and common sense ? except for the staff. At one level I am good at delegating ? each department has a manager and I let them get on with it. I have been phenomenally lucky with staff. They are so dedicated and good at their jobs. But I have never been able to run a shop comfortably without being on the premises.

I am not particularly interested in opening more outlets. It would only be a big willy-waving exercise. Nearly everyone who has set up chains in this industry has gone. And I?d rather have one big store doing well than lots of little struggling shops. However I would move to a bigger outlet like a shot if the right opportunity came along.

Turnover dominates this industry, and it is a huge problem. Tell me anybody apart from Bill Gates or Andy Grove who is making serious money from this industry. Manufacturers are selling beginning-of-cycle goods at end-of-cycle prices. And they are doing ridiculous deals to get into the multiples. Packard Bell and Dixons is an obvious example. Amstrad was the last company to try that, and look where it got them.

I make a comfortable living, but I am certainly not able to retire yet. The business has 19 staff and profits are low. I am used to surviving on low margins ? One Step Beyond sells non-PC product at sub-10 per cent. But I would dearly love to bang some sense into the manufacturers and retailers. They are all sacrificing profit for an illusory market share. You can never buy market share: you can only rent it. And the rent in this industry is phenomenally high.

There is a perception that PCs are a commodity, but this is a lie. The supermarkets are trying to sell PCs and are making a pig?s ear of it. We do a lot of end-of-line business on stock the multiples can?t sell. We buy this at half price from brokers and undercut the multiples in the area. It gives us twice the profit at half the price. From the beginning, it was obvious that the machines would keep getting bigger and better.

Over time, I thought PCs would take over from consoles, and that we would make a natural progression to a fully fledged PC consultancy. But it is impossible to second-guess the future. Last year we budgeted for a decline in console sales and big growth on the PC retail side. However, the console business is going doo-lally, while retail PCs are only holding steady. The PC retail market is flat right now ? a customer of mine was offered discount for cash the other day at PC World in Norwich ? and when did you last hear Dixons doing that? I don?t expect this market to pick up until September.

One Step Beyond consists of four departments: PC retail, non-PC games, corporate business and repair. We are the biggest independent Sony Playstation Centre in the country and we are Norwich?s creche at Christmas. The parents dump their kids in our games department while they do their shopping. Hopefully, some of them buy our PCs.

We have always been in the business sector. Historically, our PC business has been split 90:10 retail to corporate. Last year it was 50:50. Next year it could be 70:30 in favour of corporate. My corporate team operates out of a sales centre above the PC department. Our market is mostly the small and medium business sector, although we do have some big customers ? we are a preferred supplier for Norwich Union.

Small businesses don?t like dealing with large computer resellers. The experience is like going to a dentist?s waiting room, where you sit in the reception area until it?s time for your appointment. This can be an intimidating experience. Small business owners like to do a bit of research before they buy their machines. And it is a much more friendly and less pressurised experience coming into One Step Beyond.

We have to do a fair amount of juggling to succeed. It is like tightrope walking: it?s great until you fall off. We have competition everywhere we look. On the games side we have Virgin, Electronics Boutique, Game and HMV; on the PC retail side there is Comet, Dixons and all the rest. And on the corporate side there are still a couple of indies as well as the big corporate resellers.

Some of our competitors are formidable ? two indies went bust as soon as PC World opened here. But we have 12 years of experience and we are a name player in Norwich. Our competitors have had to measure up to us just as much as we have had to measure up to them.

The chain stores are very arrogant. They think they are so professional, and they automatically assume the indies are crap. They totally underestimate us and this is to our advantage. As an indie I am used to being ignored.

For 12 years I have been a small fish in a small pond. And I have been constantly fobbed off by the manufacturers. They have only started to pay attention as we have got bigger. I have always believed in talking to other indies ? it makes you realise you are not alone.

We are ensuring our survival on two fronts. I am a member of the Network Buying Group, and I have recently joined the HP Office Centre Programme. Network is a co-operative group of 25 dealers. Like all the start-up members, I believed we were doing this to buy product more cheaply. But this has turned out to be only a small benefit of the group.

The members are a very tight-knit, disciplined bunch who want to be in business in 10 years? time. And we do this by building partnerships inside the industry with suppliers we hope will be in business in 10 years? time too. Only a fool buys on price alone. It is the extras that count. That is why Ingram is our preferred supplier in distribution. Its pricing is the same as any other distributor but we chose it for service support and marketing. Last Christmas, for example, it produced a magazine for Network, which tailored the prices for each member.

The HP Office Centre programme is a brilliant concept for SMEs and it is exactly the market we want to attract. This is another example of partnership. HP actively supports mem- bers who are committed to volume selling. If there is any problem with product, HP will deal with it. Because of the breadth of its product line, it is the only company that can make such a franchise concept work.

Compaq wants to do something similar with the SMB Reseller Programme. But I don?t see how it will succeed. What Compaq printer, what scanner can you sell? Besides, Compaq is less of a brand than it thinks it is in the SME market. We sell quite a lot of end-of-line Compaq product, but we do not see much customer recognition for the company. We would never sell new Compaq kit because its DOA policy is complete crap. It is finally getting its act together on sales or returns, but it has left it too late for the market we operate in. We are adopting a two-tiered approach for our PC sales. We assemble our own PCs for the simple reason that the margins are twice as high as branded product. But I anticipate this will become less important. The HP Office Centre is very much the future. The thinking small businesses will buy branded HP product; while home user and companies buying solely on price and home will take our clone machines.

Indies have got to work together if they want to stay in business. There is no right way and there is no wrong way of doing this. I am not claiming that you have to join Network or the HP Office Centre. But if you are not a member of something, you will not survive.

As far as One Step Beyond is concerned, I would not say I was confident for the future. Who knows what will happen? One reading is that there will be only two shops left on the high street by the year 2005. One will be selling phones and the other selling computers, while everything else will go over the internet. If that happens, I have just as good a chance as any of being that computer shop. But failing that, I could always go back to my farm in Wales. I think I?d be quite happy.