Following the news of the Granville Technology Group going into administration, we have interviewed Tony Riccardi, the General Manager of system builder MESH. We asked for his thoughts on the closure of Time's retail outlets and also what's it's like competing in the current market.What are your thoughts following the announced closure of all 78 Time stores and the laying off of staff at the company?
A lot of companies are reporting that retail trading conditions are challenging right now. It is always unfortunate to hear that good people have lost their jobs.
The last time I met with Brian Flynn [former Financial Director with Time], it was obvious that they were a hard-working company with a lot of dedicated staff. Let’s hope that any redundancies are only short-term.
How are MESH finding the market right now?
Very good. Sales are strong and July was a great month!
Last week, IDC reported that year-on-year growth in PC shipments for Q2 in Western Europe rose over 20 per cent.
That is the kind of market that we are operating in right now.
What does it tell you when one company can be doing so badly while their competitors thrive?
One of the most important parts of our strategy is customer retention. Anyone can get a customer to buy a PC once, based on price. Getting them to come back is the most important part. By focusing on quality, we find an ever increasing number of people willing to recommend MESH to companies, friends and family. Solid ‘repeat business’ means you don’t need to outspend your competitors on advertising in order to enjoy good revenue. Controlling costs keep you competitive.
What changes have you noticed in the paper press during your last 10 years with MESH?
The major titles peaked at over 1,100 pages at the end of the nineties. However, the advent of cheap internet connections has changed the market completely. We still support the magazines whenever possible and we are probably the largest run-of-paper advertiser in the market now - but the web is really the focus for our future.
We have plans to run extensive online campaigns and the web will be key to our future success.
Having a local PC shop is one thing, but the costs involved in operating a chain of stores is something else. We looked at opening shops about five years ago but realised that it was not the right thing for us. Focusing on our web strategy was one of the best things we have ever done.
Can you be specific about the way that customers are evolving ?
The top magazines will always be there, but there are likely to be fewer of them. Every PC sold automatically increases the number of people search the web for buying advice – hence our web-centric strategy.
MESH seems to win a lot of magazine awards – how does that make you feel?
As long as there are group tests, we will enter systems. We relish the challenge of pitting our ability to create award-winning hardware against global organisations with billion-dollar turnovers. When MESH win a group test, it gives me the same feeling as watching Ducati winning the world championship. You don’t need to be the biggest to be the best.
How reliant is MESH on magazine group tests these days?
There was a time when winning reviews was everything. When customers were buying their first systems, they would religiously read the mainstream press and follow the editor’s recommendations to the letter. Over time, the UK PC-buying public has become much more knowledgeable. With over six million desktop systems being sold into the UK every year, customisation and service have become far more important. MESH has built a reputation of trust over the past 20 years. Customers know that MESH are the experts and that our combination of price and service cannot be beaten.
We are increasingly seeing the global PC business as a straight fight between Dell and the companies from South East Asia. How can MESH compete in such a titanic struggle?
There are many factors but I would say that, overall, our relationship with AMD has been crucial to our success. Global players buy such huge quantities of Intel chips that they are able to leverage economies of scale that are simply not available on a local level. AMD’s approach has been radically different. Our relationship has developed over the past decade and – since the launch of the K6 - sales of AMD-powered MESH PCs has gone through the roof. We are now one of AMD’s biggest customers and we work together to develop new markets. Intel is still an important supplier to us, but our current market position would not have been possible without the amazing products that the AMD’s engineering team have brought to market.
Recent Mercury figures seem to show that ATI is finally gaining a foothold in the chipset business, will you be using CrossFire ?
There is no doubt that nVidia’s SLi solution has caused a great stir over the past 12 months. The chipsets are good and we have built a lot of review winners using this technology. At the same time, you cannot ignore a company like ATI that picks up 27 per cent of the worldwide AMD chipset business ‘overnight’. We will be evaluating CrossFire over the next four weeks and, if it is as strong as they claim, we will introduce it into our range in Q4.
Is it possible for MESH to continue to deliver revenue increases without branching into new markets?
Very sharp question! As the General Manager of the UK’s leading system builder, I believe we must never lose focus on our core competency. However, at the same time, I have a responsibility to the board to deliver solid revenue growth. In Q2 I kick-started a project to introduce a range of new products to our audience.
MESH now offers portable DVD/DivX players and voice-over-IP services as well as a range of PDA and GPS navigation products through our site. This has been in response to customer demand. People who trust MESH to supply their desktop and notebook systems on a daily basis also want us to be a one-stop-shop for all their computing and communication needs. As long as we can ensure brand quality, this is something that we will continue to expand.
One last question, how do you see MESH’s position in five year’s time?
From humble beginnings, we have worked hard to get to the front of the market. Despite strong competition from overseas, I still believe that there is demand in the UK for a superior product. That is what we will continue to deliver, and I firmly believe that our success will be rooted in our ability to do so.
Do you have any advice for the Time staff that have been sacked ?
Our constant expansion means that we are always looking to recruit experienced staff. We would encourage any London based former-employees of the group to email their details and covering note to firstname.lastname@example.org
We would like to thank Tony for his time and market insight today.