'Huge latent demand across the UK'

With 12 new franchised outlets scheduled to open in 2008 and more regions available for prospective franchisees, secondhand technology retailer CeX is positioned to reap the increased demand for value for money goods created by a downturn in the economy

Q: What is the attraction for customers of buying and selling pre-owned goods and specifically with technology?
CeX Director Jon Cronin: The main attraction is value for money - customers buying a secondhand item are getting it cheaper than buying it new. At CeX there is the added peace of mind that they can inspect the goods before they buy and also receive a 12-month warranty on everything they buy from us.
CeX Director Hugh Man: Customers selling their old goods are getting some money back for an item they no longer need, such as an old mobile phone or a DVD they have seen. They enjoy the certainty of the price and payment in cash on the same day they sell their item.

Q: How does a downturn in the economy affect the business on the buying and selling sides?
JC: A downturn in the economy encourages people to seek value for money, which is great news for CeX. Our business works well when the economy is strong, but has a natural boost when times are a little more uncertain. In a downturn more people start to clear out their old unwanted items and bring them to CeX and this greater supply of items allows us greater margins and price flexibility. This means we can increase profit margins and/or drop prices to become even more competitive.

Q: How is the drop in the availability of consumer credit affecting the business?
HM: A drop in consumer credit in the wider economy means less money in circulation and also less credit deals from retailers. If you have to pay for an item in one go you are more likely to look for value for money, making a cheaper secondhand item with a 12 month warranty from CeX even more attractive.

Q: What differentiates Cex from online auction sites such as ebay? How do franchisees benefit from the online side of the business?
JC: CeX offers a greater speed, security, flexibility and convenience. Customers selling to CeX receive fixed buy-in prices and the availability of same day cash - on ebay you will be waiting for weeks to get your money. Customers buying from CeX can inspect the goods before they buy and enjoy peace of mind with a 12-month warranty from a branded high street chain. With ebay there is none of this certainty - there is no chance to inspect the goods before you buy, most items lack a warranty and there is no certainty that the seller will be around to post your item back to you if problems arise six months later and you have already left your feedback.

HM: CeX has had a website for 10 years. Our site has most of the advantages that a CeX store has over ebay. CeX.co.uk allows customers to buy selected items which are dispatched from selected CeX stores. Buying from CeX.co.uk means customers have the peace of mind that the Distance Selling Regulations apply and if the item is not what they want then they can return it for a refund. This consumer protection does not apply to auction sites. For franchisees CeX.co.uk offers the potential to get extra sales from beyond their local area, even when their store is closed.

CeX.co.uk also buys items from customers who do not live near a CeX store and this has proved very popular. In fact our website orders department has recently moved to larger premises to handle the volume of goods being sold to CeX. This is added proof that there is huge latent demand across the UK for more CeX stores in locations we have yet to open in.

Interview: Stuart Anderson