Wednesday, Dec 14, 2011

Gulf News

Dubai Baderuddin Panakkat has a simple enough marketing strategy — he trades on one of the worst fears a prospective buyer might have.

“If a fire were to break out in a high-rise apartment or some other unforeseen mishap occurs whereby you lose your passport, certificates and other documents, what then?” said Panakkat. “It could have a hugely detrimental impact on the individual as replacing them is time consuming, more so if he or she is an expatriate.”

As marketing pitches go, this is succinct enough. His company, the Dubai-headquartered Al Areen International Group, has been representing Eagle, a South Korean maker of safes, since 2008. Earlier this year it acquired the rights for Sistec, a German brand, as well as for Lucell, another South Korean company but specialising in highly customised units if one’s interests skew towards gold-plated, Swarovski encrusted security systems.

But why go in for a product category that would not exactly fly off the shelves? More so when to get a contract, the prospective client has to be put through a learning curve. Also, the replacement market for safes is non-existent.

“There aren’t that many categories open where a new entrant can come in and start building up momentum; but we saw that security systems was one area where the market was still developing,” said Panakkat. “In safes, the dominant player historically has been Chubb and then there were a few Chinese brands selling at the lowest price point,” he added.

More acceptance

“Between these two extremes, there was a market that could be developed by new entrants and that we did through Eagle first and now with Sistec. It’s also the unfortunate case that every time a fire at a high-rise is reported what we have to say finds much more of an acceptance with a potential client.”

There were internal compulsions for Al Areen to want to move into new lines. Its core business was in office equipment and stationery supply, which had long since turned into an extremely low margin operation. There was a need to make an exit and get into lines that would have more favourable margins to deal in.

Not just that, the company invested in a brand new headquarters, showroom and warehousing facility, in a swanky facility in Al Garhoud. “The reason was we had to grow our visibility in the market to be taken as a serious player and for that we had to have the right property,” said Panakkat. “But we had to do things with caution as the market was still going through the downturn of 2009 and 2010.”

The flowering of residential communities across Dubai and more recently in Abu Dhabi has helped the cause of safe vendors. The Palm, according to Panakkat, has been an exceptionally fertile mini-market.

Fast development

But even with all the fire incidents at high-rises, residential sales still represent a marginal element of Al Areen’s order book. This is where the business clients come in handy.

“It’s a fact that a good majority of businesses in the UAE still don’t see the need to invest in proper data safes — but with more awareness this is a market that could develop to its full potential pretty fast,” said Panakkat.

Moreover, each time a bank goes in for a branch expansion, more opportunities come to the fore. And then there are the leads provided by all the new shops opening up in the emirates.

“The retail industry currently offers the biggest opportunity for safe sellers in the UAE; no new outlet opening anywhere can afford not do invest in one,” said Panakkat. “But it has is a price-sensitive market in the last two years, which is why having units in the Dh2,000 to Dh3,000 range is vital.”

Now that the company has got the hang of security systems, it plans to add more franchises in related lines. Rights have been acquired for Nordplan, a Danish intelligent storage solutions provider, as well as for Rexel for shredders.

“There’s a favourable factor at work — post the recession businesses here are turning ever more cautious in their strategies and operations,” said Panakkat. “In this space, data protection has become a top priority.

“While the big and the nearly big enterprises have implemented such processes, there is a vast universe of small and mid-sized companies which haven’t. That’s what we are going after.”

By Manoj Nair?Associate Editor

Gulf News 2011. All rights reserved.