24/05/2005 - 22:00

ThinkSmart finds its feet in niche market

24/05/2005 - 22:00

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Niche markets can be hard to grow in, especially since marketing requires selling a brand and often the business concept.

Niche markets can be hard to grow in, especially since marketing requires selling a brand and often the business concept.

But building successful retail partnerships together with quality direction has helped point-of-sale rental financer ThinkSmart to rapidly grow its operation throughout Australia and recently into Europe.

The nine-year-old company has developed two products which currently turn over approximately $30 million per year, according to ThinkSmart’s managing director Ned Montarello.

The more established of the company’s services is the RentSmart business rental facility and the recently launched SmartCheck service.

The RentSmart service is offered mainly to small businesses and would be familiar to most people who have ever tried to rent technology at ThinkSmart’s retailing partners that include Coles Myer, the Woolworths Dick Smith Group and David Jones.

These retailers offer the point-of-sale rental finance for ThinkSmart, giving customers the ability to rent goods costing up to $20,000.

Mr Montarello said this sort of sum was typically too large for credit cards to offer and too small for banks to process economically, allowing the product to thrive in a market niche, he said.

Low weekly rental payments are enough of an incentive for customers to consider RentSmart as an alternative to an outright purchase and this has been very successful, he added.

The product is also unique, Mr Montarello said, in that it offers portability and scalability, which are important selling points to adapt products quickly and affordably in order to grow, he said.

Meanwhile, the newer SmartCheck service offers retailers point-of-sale finance approvals through computer software that checks credit-worthiness, allowing RentSmart finance to be competitive with cash and credit cards.

The group’s UK operation, based in Manchester since 2003, has been helped by a joint venture arrangement with Halifax Bank of Scotland servicing a direct agreement with Dixon’s PC World to deliver ThinkSmart’s point-of-sale business leasing facility throughout the computer superstore chain, one of the largest in Europe.

Mr Montarello anticipates this market will contribute between 30 and 40 per cent of the group’s revenue within four to five years.

But while the overseas growth plans of the company are grandiose, he said ThinkSmart hadn’t outgrown the Australian market.

“We anticipate continued growth in the Australian retail sector with our newly-developed SmartCheck system, growing to generate around 30 per cent of domestic revenues in the near future,” he said.

In Australia, the success of the business in Europe has hinged to a large extent on the partnership with Dixon’s, Mr Montarello said.

That success has led to a recent addition to the group’s European operations, when this month ThinkSmart officially launched its services in Spain throughout Dixon’s stores, utilising a wholesale funding arrangement with Spanish bank, Banco Santander.

The company’s growth is, in large part, also due to the quality of its directors, Mr Montarello said.

The board is chaired by Freehills partner Steven Penglis, who is joined by Macquarie Capital Equity Markets Limited director, David Griffiths and Australian Capital Equity’s Curt McDonald, who represents a 10 per cent Australian Capital Equity stake in the company.

Other prominent shareholders include Janet Holmes a’ Court and Bob Bunning, but Mr Montarello said these high profile investors had no interest in running the company and that the current board, together with five to six key senior executives, are focused on further growth of the ThinkSmart brand.

In an endorsement of ThinkSmart’s growth prospects, in March this year the board revealed that ANZ had offered to buy into the business through an equity acquisition of 16 per cent from existing private shareholders for $6 million, which the directors accepted.

Commenting on the investment, Marshall Allen, director of ANZ Private Equities, said that ThinkSmart’s impressive track record and proven history of growth in revenue and earnings made it an attractive investment opportunity to be closely watched.

ThinkSmart is forecasting 21 to 30 per cent growth in the next three years.

 

THINKSMART

  • Strong partnerships to distribute products and services
  • Minimise setup costs through scalable business
  • Develop related products to support main source of revenue
  • Identify global expansion opportunities

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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