Q&A with top management | From the president to investors

2008

Can PC DEPOT secure profits in the current PC market where sales prices are falling due in part to the emergence of 50,000 yen PCs?

The average price of PCs is admittedly declining, but PC DEPOT's unit sales of PCs are rising because it offers a wide lineup of PCs to meet customer needs, from mini-notebook PCs to high-spec PCs.
Also, PC DEPOT does not just sell merchandise –it provides technical maintenance and support which is a major factor that differentiates it from other companies. Sales of technical maintenance and support services are growing along with unit sales of PCs, and service sales now account for nearly half of total earnings. PC DEPOT believes firm service sales are a reflection of the favorable reputation it has won for itself among customers.

As PC prices decline and become more affordable, the customer base will broaden from one PC per family to one per person, and as PC usage diversifies, the technical support required by customers will become more diverse too. This will increase the base of customers requiring the type of specialty support in which PC DEPOT excels.

What is the store opening policy of PC DEPOT?

PC DEPOT targets the opening of 4-5 large new stores with over 1,500 square meters of floor space per year. Also, it aims to open roadside stores and stores near existing volume electronics retailers to provide suburban shopping convenience and alternative services to those provided by volume electronics retailers.
PC DEPOT is also promoting PC Clinic franchising via "in-shop" stores in volume electronics retailers in order to provide technical maintenance and support at stores outside of its own network. We plan to open many new PC Clinic stores.
PC DEPOT will work to further improve its brand recognition among customers by opening both PC DEPOT and PC Clinic stores going forward.

Why are you pushing forward with the opening of large stores? What is the secret that allows you to open large stores as a PC specialist?

PC DEPOT is opening large stores to strengthen its product lineup, and to enhance public space -both free space and space for PC Clinic. PC Clinics within large stores can handle approximately 100 PCs at a time, and we will continue to build out infrastructure to provide technical maintenance and support to as broad a customer base as possible.
We opened Ashikaga Store (in Tochigi Prefecture), with 3,000 square meters of floor space, in November 2008. Lower selling, general and administrative costs in the suburbs compared with the Tokyo metropolitan area made the opening of such a large-scale store possible. We are also working to improve efficiency on the personnel side of operations, and therefore do not expect a large increase in costs.

You state that you saw "volume benefits" in the second quarter of Fiscal 2008, but could you explain in detail the factors behind this?

In the first quarter of Fiscal 2008, PC sales prices declined in the overall market compared with the previous year, and this created a vicious cycle of declining inventory value.
However, from the summer of 2008, the introduction of a series of affordable and distinct mini notebook PCs under 50,000 yen stimulated demand. PC DEPOT decided to strengthen its lineup of 50,000 yen PCs, and this boosted unit PC sales.
Also, we provided customers with peripheral equipment and software necessary for the use of PCs, as well as technical services and broadband, and the resulting increase in merchandise and services sales boosted overall earnings.
We believe these "volume benefits" will continue even after the second half of Fiscal 2008.

The employment situation in Japan has been deteriorating recently, but what is the status of employment and hiring conditions at your company?

The promotion of long-term employment has been an important policy of PC DEPOT from the beginning. While we employ some temporary staff dispatched from vendors, almost all of our professional and technical staff work actively as either full-time or part-time employees of the Company.
One way of promoting long-term employment is to encourage employees to cooperate in adjusting their shifts during busy seasons which coincide with extended public holidays, and then encourage education and long refreshing holidays during the low season. In this way, we try to fill seasonal gaps, and encourage each employee to raise their skill level, to create an environment that is conducive to long-term employment.
Although the employment environment is deteriorating dramatically, we will continue to hire on an ongoing basis.

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