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Dealers emphasize service in response to downturn.

The current economic slump has forced many computer dealers to stress the service they offer in order to gain and retain clients.

The dealers say consumers are cautious about investing in equipment.

"People are shopping more wisely. I think they don't believe that the recession is over," says Hank Czapski, manager of Mikadon Computer Engineering Inc. in Thunder Bay, a dealer of Hewlett Packard, Novell and Autocad computer systems. "If anything, they are even more cautious than they were six months ago."


The buyers' caution has been hurting sales, but the service business has increased.

"People are patching up rather than purchasing," notes Doug Nadorozny, president of the AMS Group in Sudbury, a dealer of NEC, Toshiba, Sharp and AST computers.

Nadorozny has expanded his firm's service department to capitalize on the increased demand for repairs and maintenance.

Nadorozny agrees with Czapski that consumers are not making any capital investments because they "expect things to get worse."

To compensate, both dealers say they are emphasizing service.

"We've really stressed service, particularly when it comes to closing a sale," says Czapski.

"You have to have customers who want to deal with you," adds Nadorozny. "You'll just be banging your head against the wall if you try to compete on price alone."

Nadorozny says manufacturers have narrowed the price difference between low- and high- end computers in order to generate sales.

"The industry narrowed the gap," he says. "The price for the high-end products came down so much that the prices for the lower-end products had to be slashed."


Depending on the product and the dealer, price reductions ranged from five to 50 per cent, forcing many dealers to reduce their margins of profit.

"In the past six months Apple has slashed prices by about 50 per cent, and the dealer's margins have been cut in half too," says John Dane, the manager of North Star Computer Ltd.'s Timmins office.

"Sales have been up. We're working harder and doing more to keep them up," says Dane. "But because of the lower profit margin we're not making as much money."


Nadorozny believes that his firm has fared better than many others because it specializes in such areas as AutoCAD and multimedia technology.

"Some of the smaller firms have gone out of business, but they've been replaced by other smaller firms," he says. "The smaller companies seem to be the ones to cycle in and out of the market."

Nadorozny believes the recession has been more severe for dealers in southern Ontario.


Czapski, meanwhile, has added two outlets to his Thunder Bay operation. The plan is to serve the retail and home business markets with the new stores in order to better serve corporate clients at the main store.

"Home office business has been picking up," he explains. "It's a very strong market right now."

Czapski believes people who operate home offices are coming to the realization that "computers are an office staple, rather than a luxury."
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Title Annotation:computer dealers
Publication:Northern Ontario Business
Article Type:Industry Overview
Date:Jan 1, 1992
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