To understand and explain the continued success of (and potential threats to) Challenger's retail business, I think it is inadequate to just compare it with the competition from Sim Lim Square and the shops there. Apart from operating 2 megastores (1 each in Singapore and Malaysia) and a growing number of specialty stores covering most of the busy shopping malls in Singapore, Challenger's hold on its growing regular customers is also because of a well-conceived package of benefits for its membership scheme.....
http://www.challenger.sg/joinmember.html
The benefits included in the package are appealing and provide a strong total value proposition to encourage people to join as members and patronize Challenger's stores regularly. I guess this is the main basis behind Challenger's steady growth in sales and profits.
Of course, we should not forget the contribution to sales and profits from -
(1) Challenger's small-format stores located in Funan DigitaLife Mall trading under the name "Matrix IT Gallery".....
http://www.mig.sg/about-us/
(2) the relatively new on-line store trading under the name "12Buy.sg".....
http://www.12buy.sg/OnlineShopping/Home
(3) the B2B marketing division - focussing on SMEs in Singapore - trading under subsidiary Challenger IT Services P/L.....
http://www.challengerits.com/aboutus.htm
(4) the regular Challenger Roadshows being held at the atriums of many busy shopping malls; and
(5) operating sales booths at the request and on behalf of key OEM suppliers (like Seagate, etc.) at the regular IT shows held at Suntec and Singapore Expo.
Backed by a high and growing volume of product sales, Challenger should be able to get better price discounts and promotional incentives from most of the OEM suppliers. I guess this is an important factor contributing to Challenger's sustained ability in maintaining a decent GP margin and at the same time providing competitive selling prices to its regular member-customers. On top of that, many OEM suppliers have agreed to pay for in-store advertising in Challenger's stores, and this brings in additional revenue/profits to the retail operations.
On top of all the above, Challenger also has 2 other promising/growing businesses -
(1) Supplying LED light displays to many sectors in Singapore.....
http://www.cbd-evision.com/index.htm
(2) Indepedent call-centre and CRM services provider.....
http://www.incallsystems.com/index.html
which also markets Challenger Group's own in-house "Star Shield Extended Warranty" coverage on IT hardware to others.
Adding up all the above, Challenger is truly a multi-faceted IT retail enterprise!