CEX: Dynamic gadget-driven retail business

OVERVIEW

• High Margins
  
• Initial training and
  ongoing procedure
  updates
  
• Limited competition
  
• Stock and pricing advice
  from experts
  
• Intranet and web support
  
• Hands-on store
  identification and design
  
• Bespoke EPOS software
  

SUMMARY

No. of franchisees: 2

Investment: Around £130,000

Franchisee profile: Energetic and enthusiastic people capable of managing a busy shop. Retail experience and an interest in the product ranges would be advantageous.

Year established: 1992

Year franchised: 2004

Priority recruitment territories:
Nationwide

'This is a business that works when the economy is booming and even better when it is less buoyant.'

No sooner is one games console released then a better model offering more features and better graphics supersedes it. This rapid turnaround of new technology is driving the growth of CeX (Complete entertainment Exchange), which specialises in the buying and selling of quality second-hand technology and entertainment products.

Its 21 company-owned stores specialise in five main product lines called 'Super Categories': Videogames, DVDs, Computing, Electronics and Mobile Phones. Customers are attracted to the stores by the opportunity to buy second-hand goods with a 12-month warranty at attractive prices and the ability to exchange their unwanted goods for cash or something they do want.Founded in 1992, CeX is now embarking on a nationwide franchise development programme and is aiming to achieve national coverage within five years.

Its pilot operation in Croydon is owned by ex-CeX Stock Control Manager Kasim Ali. Having witnessed the growth of the company from the inside, he was impressed by the durability of the CeX model to withstand a downturn in the economy.

'The business model is recession-proof,' he endorses. 'Every product we stock traditionally has a cyclical pattern. The beauty of CeX's second-hand model is that we are able to manipulate the buy and sell prices to smooth out seasonal lows in demand.'

Franchise Director Hugh Man points to a huge potential market for CeX. 'The UK is the world's third largest market for videogames,' he quotes. 'Over the past 10 years 20.8 million games consoles and hand-helds were sold. In 2005 the new hand-held Sony and Nintendo consoles and Microsoft's Xbox 360 were introduced. The Sony PS3 and Nintendo Revolution are due to arrive later this year... and this is just one of the markets CeX serves.

'DVD has entered the living room faster than any previous device and in the fast moving world of computers, upgrading to keep ahead is paramount for technology buffs. From MP3 players to digital cameras and the huge range of associated memory cards, electronics is our fastest growing Super Category. In terms of mobile phones, 88 per cent* of 11-14 year olds own a mobile phone, compared to 39 per cent in 2000 and by the end of 2006, 3G phones will reach double-digit penetration. All of these innovations provide compelling reasons for consumers to sell their older technology to CeX.'

In addition, customers benefit from a high-tech website where they can check real-time product availability or obtain an estimate for an items exchange. Each store has access to a 0845 number direct to the CeX call centre and a sophisticated EPOS system catered to selling second-hand products with automated pricing updates. 'While an interest in the products we sell and retail experience would be an advantage, they are not essential,' states Hugh.
'We provide full initial and ongoing training in the operation of the business, IT, customer care skills, and buying and selling.'

Franchisees will benefit from CeX's knowledge and experience of the marketplace such as optimal buying and selling prices and product supply and demand curves, which are essential to business success and avoiding stock shortages or surpluses. Ongoing support is provided by the senior management team including general business advice, new product updates, pricing, marketing, product repair, stock redistribution, IT, HR, public website (www.cex.co.uk) and intranet. 'This is a business that works when the economy is booming and even better when it is less buoyant,' Hugh insists.

CeX is searching for energetic and enthusiastic people who love gadgets or are business minded with the ability to fund around £130,000. This is a dynamic, fast-paced business driven by consumer demand for the latest technological developments. Hugh adds: 'We're an energetic and enthusiastic retail brand seeking like-minded individuals keen to make substantial profits from the buying and selling of second-hand products.'