SINGAPORE - After beefing up its online presence in recent years, homegrown retailer Challenger Technologies - a household name for affordable IT products - is turning its focus back to brick-and-mortar stores.
In view of a growing appetite for higher-end products, Challenger has gone luxe with its newest store - Musica Boutique in Ion Orchard. The store was launched on Friday (Jan 18).
It is focusing on audio products with digital elements that can be hooked up to customers’ phones, for example. The 2,000 sq ft store is touted as a space with a soundproof room where listeners can compare premium brands in one location.
The move comes more than two years after Challenger shut its 53,000 sq ft flagship store in Funan DigitaLife Mall, when the mall closed for redevelopment. The revamped Funan mall is scheduled to be reopened by June this year.
When it closed its megastore in 2016, the company decided to strengthen its online presence with its Hachi.tech marketplace instead of reopening the store. The change in consumer buying behaviour, rise in e-commerce, manpower challenges and high rental costs, contributed to the decision.
He noted then that factors such as the change in consumer buying behaviour, rise in e-commerce, manpower challenges and high rental costs, contributed to the decision.
Challenger chief executive Loo Leong Thye estimates that less than 5 per cent of Challenger's revenue now flows through Hachi.tech. It has around 40 stores islandwide.
With Musica Boutique, the 37-year-old business - which posted a net profit of $4.5 million and revenue of $82.5 million for the third quarter last year - is setting its sights on a different, growing segment.
Since 2014, Challenger said it has seen a rise in customers requesting for mid- to high-end products, meaning those priced $200 and above. Some of its products now start at $9.90.
These buyers tend to be 35 years old and above. They are looking for a good sound system for their homes, although younger people appear willing to pay a premium for products like noise-cancelling headphones as well, Challenger's chief marketing officer Loo Pei Fen told The Straits Times.
She said the company decided it was time to look into serving this market segment. But the existing Challenger shops, which can be "chaotic", are not conducive for sampling these sound systems.
Ms Loo noted that stores with dedicated listening rooms tend to focus on just sound systems and may even carry only one brand. To differentiate itself, Challenger decided to offer products across different brands in Musica Boutique.
"Sound is very subjective," said Ms Loo.
"Customers have to listen to as many (products) as possible in an accessible environment."
Half of the brands and 80 per cent of the product models that are available in Musica Boutique are not carried in the Challenger stores.
These include products from French brand Focal and German audio equipment manufacturer Beyerdynamic.
On why the store is focusing on digital products, despite the popularity of analogue equipment, Ms Loo pointed to common consumption patterns today: "People consume music on iTunes, YouTube and Spotify, and watch movies on Netflix."
These are areas in which good audio is a must, she added.
Despite the popularity of online shopping, Ms Loo is confident that there remains a demand for the company's latest brick-and-mortar presence.
"The one thing that online shopping cannot do is recreate sound and sight," she said.
"An iPad's retina display cannot be experienced with another device, and it's the same for premium speakers... that's one main reason customers do not approach the principal (seller online) directly."