Founder and CEO of Slot Systems Limited, Nigeria’s leading mobile phones and accessories, sales and services dealer, Mr. Nnamdi Ezeigbo, gives his insights on how to manage and grow a retail business in a fast-growing market where product, taste and preferences are constantly evolving in the Fidelity Bank SME Forum on radio as monitored by Festus Akanbi
Tell us, how did SLOT start?
Interestingly, I never planned to do business. It was just that after my compulsory NYSC service at Guinness Plc, for two years I couldn’t get a job. I actually tried to get one; you know how it is to stay without a job. Even when I eventually got one, I resigned after a month because I was not fulfilled. Since I couldn’t get a job, my only option was to create one for myself.
So what did I do? I had to learn a trade and because I studied Computer Engineering, I wanted to follow my passion but I also needed to acquire practical knowledge and technical know-how. So what I did was to spend six months with a friend who had a computer engineering outfit at the time. That was just a way of getting my hands dirty and acquiring some practical knowledge. I remember telling my friend not to bother about paying me any stipend whatsoever because I was keen to learn the trade. I was so passionate about it and those six months I spent with him actually made me get a better understanding of the business environment in Nigeria; I discovered it was more like a predator and prey relationship. Business owners seemed to be interested in making money at the expense of the customer. Nobody cared about creating value.
As a young man I was driven more by a passion for the trade rather than the money. So naturally, I became very good at it and I had a sound knowledge of Computer Engineering. However, before the six months were up, there was what I called value misalignment between my friend and I because I couldn’t compromise my non-negotiable value. So I had to leave because we had different values and thought differently. Due to the fact that I wasn’t doing it for the money, I didn’t have enough funding to secure a shop space for myself. So I decided to share a small space with a bookshop owner on that street in computer village, and that was how I came to computer village. That was how I started, although at the time I wasn’t known as SLOT. I was just repairing computers for people at that small space. Over time, I built my reputation with a focus on creating value. I made friends, gained acquaintances and loyal customers which eventually enabled me to get a small space which I called SLOT.
From your small space to 36 locations nationwide, how did that happen?
If you find a company that is out to create value and that company builds on its reputation, it grows and that is the secret. We were able to build our reputation and credibility overtime.
From that space in a small bookshop to an outlet, how did that take place?
Don’t forget we started from the perspective of repairing computers for individuals and then later became more of a B-2-B (business to business) company. We started maintaining computers for organisations and so with that, we were able to raise money to set up the first SLOT store in Computer Village. At a time we discovered that the business was growing and on some occasions you could see queues of people waiting to get their computers fixed. To us, it was more about rendering a service and not just making money. So it was cheap and people could also trust us.
Today you are dealing in mobile phones, and accessories, when did you spot the opportunity that led to the transition and why?
It’s very important to be sensitive to opportunities. In 2001, with the advent of GSM in Nigeria, we discovered that we had what it takes to actually switch or diversify into sales of GSM phones. Don’t forget that before the advent of GSM, we were also selling computer parts. From maintaining computers, we started selling the parts and selling computers. So before the advent of GSM, we had already built our own customer base, so it was easy to leverage our reputation to introduce our customers to the GSM business and diversify into this new business area.
Now you are in multiple locations, in a retail business like yours, how important is it to be operating from different locations instead of staying at a single place?
Definitely in business, you see yourself growing and it’s like you are climbing a ladder. At every stage, you see the need to expand. We discovered that we couldn’t satisfy our customers from outside Lagos. So there was need to set up stores outside Lagos. Our first expansion was in Victoria Island because we couldn’t afford to travel all the way to Victoria Island regularly to supply computers, mobile phones and all of that. So there was need for the set up and the next store was in Abuja, there were so many customers coming from Abuja to patronize us. So we identified the need and filled the gap and that was how we opened a store in Abuja. That has been our expansion model over the years. In fact, our newest store just opened in Benin.
In your type of business, the rate of obsolescence is very high amongst your hardware like mobile phones etc. But also on your software, if you look at airtime the margins are tiny. How do you manage these two challenges?
Don’t forget we started as an IT company, so we’ve been able to use IT to drive our processes. Also, we have been able to use information systems to optimise our inventory. What that means is that with information system, you will be able to manage your your inventory position and that also helps you to avoid stock out.
So does this mean that across all your locations, you know the models that are selling very well?
You should also remember that you need market intelligence. You need to know the sound knowledge of the people you sell to and that includes what products they like and what they can afford to buy. So over time and with trends, you’ll be able to understand what consumers would always want to buy. Over time, you learn to manage these things by observing history and following trends.
How do you ensure people buy from your shop rather than any other competitor?
Our unique selling point is that we just don’t sell devices, we sell value. And then our reputation ensures that we have earned the trust of consumers, so you find that people would rather buy from a place where they can trust the product and service provider. We’ve built our credibility over time and that’s the main reason why our customers come to buy from us. I agree that what we sell is basically commodity, but we also sell and guarantee trustworthy service. You wouldn’t want to throw away your money or take the risk of just buying from anywhere.
How do you ensure proper customer relationship with your clients and continued growth of your business?
I think the most important thing to consider in a retail business is employees/staff. You need to have the right staff. I have about 520 and still counting because as we set up new stores, we’ll always need to employ more people. So if you have the right staff and they have the right training, it helps to actually manage your retail store properly because we see members of staff as the central pillar upon which the business stands. As a company, from the onset, we try to inculcate our culture and core values which are integrity, transparency and respect for ethics. When staff get to understand all these values and also understand the retail management training, that’s how it goes.
So you provide that level of training for all staff?
Of course, we do compulsory one month training before a staff starts to take responsibility. There’s a lot to do with retail management, it’s not just buying and selling. If someone does not have the technical know-how, you can’t do it well. So you need to have the sound knowledge and that is one of the problems people have. They lack some knowledge.
If you hadn’t any education qualification, would you still have made it to this level?
No, that’s not correct. Don’t forget that before my MBA, I had done series of courses and I kept improving myself. I never planned to be a businessman but I think it happened out of necessity. I couldn’t get a job, so I just had to do something on my own. Overtime I trained myself in areas of financial management, general management and in areas of building a structure.
In 36 locations, how do you ensure that services rendered are of SLOT quality?
In each of the outlets, we have what we call Customer Relation Officer and this person’s job is just to monitor transactions, customers’ complaints and then give feedback to the head office. We run more of a transactional kind of business but don’t forget also that we have another arm that is the Customer Service Department and that is the arm that actually takes care of relationship with customers. It’s that arm that actually helps us to bond with customers and to create loyalty. So it helps us to get information about how the stores are performing and what is going on in every other store.
We are on top of what is going on across all these 36 locations because we see our brand as something very emotional, so we cannot compromise anything less than what we expect.
At what point did you move from computer engineering to selling mobile phones?
Before the advent of GSM, we were basically doing computer sales and maintenance. You know computer sales and maintenance is more of B-2-B and less B-2-C (business to consumer) kind of business and so when we saw GSM as something that could help us increase our market share and revenue… If you look at the pyramid, at the bottom of it is something we see as a fortune because everybody carries mobile phone. So we saw mobile phones as something that everybody will need and want to carry. It’s more like a necessity.
I travelled to South Africa before that time and I saw for myself what GSM was doing in South Africa and I then I knew it was an opportunity and in fact a golden one at that point. And that was why we had to switch. I want to say that it was not like we diversified; it was more like a switch because today we do basically 10 per cent of computer sales and services. It was like we were sensitive to opportunity and we were able to identify such a golden opportunity and that was why we switched.
What has been your biggest challenge and who are your biggest competitors?
SLOT is an English word, and it means position or space. So we felt that there was a space open for us to occupy. And that space is a place for a company that will create value in this industry. So we believe in value creation, we believe that consumers should not just buy devices but also get the value for their money.
What was your initial start-up capital?
I always tell people that it is always easier and cost little or nothing to start a business from the perspective of rendering a service. I didn’t start SLOT as a trading company. I started as a service company and you know what a company is, it is made up of people with the aim of selling products or rendering services. The main aim of running a company is to create value for staff, customers, and value for providence of capital. The most important thing when it comes to business is the question of how do you start? Most people always run around looking for start-up capital and how they would raise money to start business. I think the best way to start is by rendering services and that was what I did. I couldn’t have afforded to raise money to start a store at that time, so what I did was to invest in myself, train myself and acquire the technical knowhow and then with that I was able to build what is called social capital and not financial capital. With social capital, you can then attract financial capital and that was how I started.