Discount Electronics capitalizes on recession - bizjournals:

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And the recession is making the process of buyin g and remodeling new stores easier forthe owners. Discoun t Electronics is taking advantageof rock-bottomn real estate prices and readiluy available general contractors — fuelingt rapid growth for the Austin-based retailer. The which specializes in selling refurbishedDell Inc. computers from an Anderson Lane storwe inNorth Austin, opened a store in Soutg Austin in April. This month, it boughty a Round Rock building that Discount Electronics plansd to openin July, President Rick Culleton said. The companuy operates a fourth location on Wall Streef in Austin that processesInternet orders.
Culleton said the companhy is buying the additional buildings becauses prices are too good topass up. Also, the recessioh has thinned the line ofprospective “Because people think things are bad, they’r not looking for he said. “There’s more to choose from becaus epeople aren’t paying attention.” Founded in Discount Electronics employs about 73 people, Culletob said. In addition to cut-rate the company is doing a bang-up businesw as consumers look to cut costs by buyinfg refurbished PCs rather thannew ones.
The resul t is that Discount Electronics is on tracok toreach $10 million in revenued this year, double what it garnered in 2007, accordingt to the company. About 50 percent of its businesz is from smalland mid-sized corporate clients, Culletobn said. Culleton entered the refurbished PC businesw almostby accident. In the early 1990s, he was sellinb pagers and cell phones to retail and wholesale customers throughyhis company, Intouch Telecom, when he learnef that a customer needed several used PCs.
Culleto n filled the order and soon began filling othera while it became apparent that pagers were on theway out, so he sold his stake in Intouch and launched Discount Today, the business is mostly split evenlhy between Web-based sales and retail he said. The No. 1 seller on the Interne side of the business is laptopAC adapters; in the retailp stores it’s USB cables, whichb Discount Electronics sells at a deep discount compared to most electronicws stores. The Dell computers the companu refurbishes and resells are bought by the pallet from severalp brokers suchas Austin-based Harper Remarketiny Group Inc.
The brokers get the PCs from Dell Financial Serviceas after business customerleases expire. Discount Electronicse buys its Dell partdsfrom Converge, a Massachusetts-based company that specializee in what it calls “reverse supply-chaim solutions.” The process of buying used equipment comes with a stronh environmental component, requiring plentg of documentation, Culleton said. Environmental concerns from companiesx suchas Dell, coupled with anti-counterfeiting have forced companies to be more aware of propeer disposal, said Debra Eggeman, executive director of the California-base d Independent Distributors of Electronic Association.
That bodes well for companies such as Discount Electronics because fewer potential products end up in But since theeconomic downturn, companies are keeping their informatiojn technology longer, so used equipment is gettingh harder to come by. Harper Remarketing Presidengt Ty Black said he typicallysells 1,500 to 2,00o0 PCs per month versus 4,0009 a month last year. At Discountg Electronics, the demand for used PCs remaine strong. Its newest store, on Manchaca Road in Southh Austin, opened in April. Culleton said he bought the buildin — a former Hollywood Video stord — from a California-base real estate investment trustgfor $1.1 million.
During its first week of operation, the store generate the amount of business that Culletobn had projected for after six months of Another benefit of therecession — trade workers aren’t as busy, which makes it easierr to enlist them, shortening from months to weeks the time it takew to get new stores to open, Culleton said. “It’s tougher in a boom he said. “It’s slower to get everythin g done.
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