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NCIX bankruptcy both an opportunity and warning for competitors

NCIX declared bankruptcy in December of last year

By Omri Wallach , in Business City Feature story , on March 21, 2018

Four months after a renowned Vancouver electronics retailer filed for bankruptcy, competitors have been quick to set up shop and capitalize on what they see as a golden opportunity.

NCIX, officially known as Netlink Computer Inc., declared bankruptcy in December of last year after more than 20 years of operation. The company had quickly grown from a few local stores in the early 2000’s to more than a dozen across B.C. and Ontario before it started to fold and transferred its B.C. leases to Ontario-based Canada Computers.

Canada Computers is now operating in three of the B.C. locations formerly occupied by NCIX, with plans for a fourth and fifth by the end of the year. Not to be outdone, Alberta’s Memory Express has opened three new stores to complement its flagship store in Richmond, including one directly across from Canada Computers on the corner of West Broadway and Cypress Street.

Industry experts are unsure whether the demise of NCIX resulted from executive mismanagement, or if it reflected an industry shift favoring online-only retailers. Competitors are hedging their bets on the former, and are capitalizing on customers checking out their new storefronts.

“[The expansion] has been good so far, and we’re also looking to move into Ontario soon,” said Lucky Ogbeide, general manager of Memory Express’s Broadway location. Since the bankruptcy of NCIX, Memory Express has seen more orders for products online and increased foot traffic in all locations, he said.

Ogbeide believes their competitor’s bankruptcy was a case of retail expansion gone wrong and falling customer service, and is confident that there is still room in the industry for retail storefronts done right.

“With Amazon and quick shipping, there’s a lot of competition,” said Ogbeide. “Everyone sees an increase in online sales, but as a customer, I would rather test and feel a product’s functionality before deciding on buying.”

The future of computer retailers

However, temporary sales boosts and opportunity don’t equate to long term success, warns former NCIX employee Charlie Shi.

“They (competitors) should be worried,” said Shi, a former product manager at the company. “The fundamental issues and problems that led NCIX to its demise linger closely to its competitors.”

Salesperson Adam Cummings assists a customer at Memory Express on Broadway.

According to Shi, NCIX was ill-advised to focus on traditional retail over online growth and on sales of individual computer parts over complete systems. Instead, he thinks the company should have recognized more consumers, especially “millennial gamers with relatively high disposable incomes,” are opting to buy fully built systems.

“The custom personal computer scene in Vancouver, and Canada as a whole, has always struggled to keep up with the U.S. and Asian markets,” said Shi. “The advent of [online shopping] coupled with improved logistics and delivery systems means most people are opting to buy full systems from gaming brands they trust.”

The number of hobbyists who want to build their own hardware is dwindling, according to Shi, and those that remain shop at online retailers like Amazon and Newegg, whose quality and delivery guarantees “simply cannot be beat by smaller retailers without the economies of scale.”

B.C.’s former electronics mainstay

NCIX was once a strong example of a company that excelled at retail and online simultaneously. High quality products and stock availability were the initial draws for many long-time customers like Chris Lam.

Chris Lam is unsure if he’ll continue to shop for computers in-person without NCIX.

“At NCIX, the whole experience of buying was good at the time,” said Lam, a freelance videographer.

Lam has been working with computers and building them since high school, and always looks for the same things when buying parts: brand reputation, shipping constraints, stock availability, and cost. NCIX ticked all the boxes, and now, the thought of turning to competitors is daunting.

“I bought a motherboard from a competitor one time. It took them a month to ship it over, and when it came it was defective, and sending it back took them another month,” said Lam.

As he’s improved his computer building skills and knowledge, Lam said he’s been doing more of his shopping online, but he’s still extremely supportive of dedicated storefronts.

“I can do as much research as I want, but I never know if its fully compatible or tested” said Lam. “I think it’s nice to go into the store and see what you’re going to buy, or talk to someone with expertise.”

The fall of NCIX a warning sign for the industry

Consumers like Lam recommended NCIX for their knowledge and large inventory. By 2017, however, high staff turnover and low stock availability were signs of problems plaguing the retailer, Lam said. Halfway through the year, walking into a store was a completely different experience.

“Whenever I checked their website everything would be out of stock, and when I went into the store, every month there were different people working there,” said Lam. “Several years back, it would be the same staff that I always recognized when I walked in no matter what day I came in.”

Lam is worried the expansion drive of stores like Memory Express and Canada Computers will eventually lead to a similar drop in sustainable quality and stock.

But Ogbeide is confident that Memory Express is staying ahead of the curve. He said that they are working towards one-day delivery within Metro Vancouver to compete with online retailers.

“Amazon and Newegg don’t have stores,” said Ogbeide. “There’s still a place for retail.”