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Smartphones stimulate growth

Bunarong Kit, operations manager of KFour, sits in his office in Phnom Penh
Bunarong Kit, operations manager of KFour, sits in his office in Phnom Penh on Tuesday. VIREAK MAI

Smartphones stimulate growth

After almost 20 years in the electronics market, KFour is still expanding and expects the ASEAN Economic Community to bring further success. At the electronic retailer’s new headquarters, operations manager Bunarong Kit sits down with the Post’s Laura Ma to discuss Cambodia’s tech obsession.

How has KFour grown?
We started as a very small shop in 1994, now we have eight branches. Between 2009 and 2012, our biggest growth was TVs and home appliances with over seven per cent annually. From 2012, the biggest growth has been in smartphones and tablets. From the beginning of the year we have seen monthly sales rise roughly nine per cent compared year on year with the last three years. Since 2009, we have grown around 10 per cent a year, which is huge for electronics because the margins are usually very low.

What makes KFour successful?
We’re a one-stop shop for a lot of brands. We don’t focus on a limited number of brands. Our exclusive authorised brands are one of our main competitive advantages, offering brands other retailers can’t. Also, we adapt to our customers’ wants and needs. Cambodians are used to getting a discount, they love bargaining. If they ask for it nicely enough, and we feel like it, we’ll likely discount it.

How has the technology market changed?
The growth in smartphones has been huge over the last two years. They have overtaken TVs and home appliances. We see people with a couple of smartphones in their pocket or in their bag. There’s an obsession with everything smart – TVs, fridges, air-conditioning, even smart washing machines. You can control it from your smartphone. A [smart] 32-inch TV can cost just as much as a 50 inch. But people buy it because of these features. It’s a huge status symbol.

How successful was the launch of the iPhone 5S and 5C?
The 5S has been a huge success for Apple. The 5C, not so much. For every one customer that buys the 5C, 20 customers buy the 5S. Since the launch, the demand for the previous iPhone 5 has actually gone higher. The 5 is metallic, the 5C is basically the 5 on plastic. People in Cambodia don’t like plastic, it feels cheap.

How does the iPhone drive your business?
We actually didn’t sell them at first because we didn’t want grey products. But demand was so high we had to accommodate customers somehow. We’re in talks with Apple to open up an Apple corner inside all KFour branches. They think the market in Cambodia is too small, but we’re waiting for them to change their mind.

Why do you want to be an authorised dealer if you already sell them?
Bringing in authorised iPhones raises our own brand image and brings traffic into the store. It doesn’t matter if we don’t make money with it. Customers come in to look and play with the phones and tablets and they will likely leave buying something else. It’s a hero product, a traffic generator. Bringing in authorised iPhones also means warranties. In the past people didn’t care about warranties, but we’re more educated now.

How does the grey market affect KFour?

It’s a headache for us to have customers come in with a product [they got off the grey market] that we can’t service because they won’t have a warranty from us. Unhappy customers mean we weren’t able to provide good enough service. This affects us in the long term. People in Cambodia don’t think long term enough but that’s changing. Grey products create price wars. Education on warranties and quality will help kill the grey market. With the exception of the iPhone, we don’t focus on grey products anymore. Samsung’s market used to be 20/80 real product to grey product ratio. But it’s dropped to 50/50 now. We foresee that dropping even more in the future.

This interview has been edited for length and clarity.

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