Taking Business From The Big Box Retailers
As an independent storefront operator, Cheap Guys has been a proverbial David battling the retail Goliaths. And it seems to have done just fine after having established itself as a regional store brand with a reputation for competitive prices, good service and expertise. "People know who we are," founder and CEO Glen Coffield said. "Our word of mouth is fantastic."
But it is more than word of mouth that, for the second time, placed the Longwood, Fla.-based system builder among the top 10 White-Hot Performers on the CRN Leading System Builders list. The 11-year-old company reported that its unit sales were up 41 percent last year to about 10,300 units. The company also reported revenue last year was up about 16 percent to about $11 million.
One thing that helped Cheap Guys last year was the retrenchment by CompUSA, which resulted in two store closures in his region and prompted Coffield to think about expansion. "We have customers calling us saying, 'You need to open a store here, we have nowhere to go,' " he said.
Even when he has competition from big retailers, though, it seems to be more help than hindrance. Many of the chain-store customers come to him for service. "For some reason, they don't consider Best Buy a computer company," he said. "We probably fix more PCs in our stores than all of the Best Buys and CompUSAs put together. In our area, in our market, we do a huge volume of in-store service."
While Cheap Guys' primary focus has been on consumers with its components and white-box sales, the company's growth more recently has been a result of skyrocketing B2B sales, Coffield said. And there, too, competition from big retailers has turned out to be a blessing in disguise. He said Best Buy's Geek Squad was a boon for his business, prompting him to launch his own on-site service business."We never did on-site before, and that's been a major growth area for us," he said. "That's how Geek Squad has helped us because it's created so much attention for on-site service. And our rates are so much lower, people are going, 'Well, yeah, OK, we'll use you.' "
To get into the market, Coffield bought an on-site service company and hired its owner, Dave Pacansky, as the unit's manager. "Basically, he wanted to get a hold of the [on-site services] market to provide better service to his customers and he was familiar with what I was doing," Pacansky said.
That led partly to what will be perhaps Coffield's biggest challenge in the year ahead—the company's name change. Coffield reasoned that when the company began and its focus was on refurbishments and the audience was 99 percent male, the name Cheap Guys was a perfect fit. "Males like that word 'cheap,' but as the market is changing, women are becoming more of a buying force on the IT side," he said. "Women don't like the word cheap."
Perhaps more important, the new name reflects the company's changing focus toward more advanced systems. "It's more indicative of what we're becoming," he said. "We're the smarter choice. ... It's really not a 'cheap guy' thing. We do smarter systems at a better price now, and I felt it was time to have the name reflect what we are."
That doesn't mean Smart Guys won't still stand for good bargains. Coffield continues to swear by his surefire formula for earning higher margins. "Years and years ago I was in the car business, and you make your money when you buy your inventory," he said.
"I find that applies in this business as well. You make your money when you buy."
Coffield said all the vendors know he's a deal buyer. "And once you're known to step up to the plate and make big purchases, you start getting offered more of this stuff," he said. Chuck Gress, regional sales manager for D&H Distributing, Harrisburg, Pa., agreed that was certainly one of Coffield's keys to success. "Glen is a shrewd buyer," he said. "And then he knows how to sell systems and notebooks."