Smartphone prices are dropping, so the industry analysts over at IBISWorld have predicted that consumers eventually will opt to replace rather than repair their iPhones, Androids and other devices.
Yet entrepreneur Terrence Newsome, who opened his Gadget Ninja repair shop a year ago in Sacramento, still seems bullish on the sector. So do other business owners like 20-year-old Alika Salazar, who started repairing cellphones as a tween out of his parents’ home and now runs three iParts Outlet stores in Folsom, Vacaville and Sacramento.
“People are carrying multiple devices,” Newsome said. “They’re keeping them longer, and the screens are getting bigger, making them more prone to damage. I wanted to get in and start to expand before others start to expand. I feel a sense of urgency to get other places up and running before other places figure this out.”
Cellphone repair shops already are proliferating around the Sacramento region with names like Wireless World and CPR Cell Phone Repair. Even big franchisor Batteries+Bulbs decided to move into the sector a little over a year ago: B+B franchisees Don and Ryan Tollefson will be training about 20 of their employees in replacing screens and repairing batteries.
The IBISWorld report stated that industry revenue will grow by 2.2 percent to $4.4 billion through 2020, but the declining cost of cellphones and increases in disposable income will start to eat away at the gains. Roughly 25 percent of consumers seek repairs for damaged screens; 20 percent, battery replacement; and another 20 percent, water damage. Cosmetic damage and other functional repairs bring in the remainder of customers.
Newsome launched his business in the River Park neighborhood, but only 1,000 cars a day passed his shopping center and walk-in traffic was desultory. He moved Gadget Ninja to a second-story walk-up at 6505 Folsom Blvd., right near an entrance to Sacramento State.
Roughly 20,000 cars pass by, he said, and loads of Sacramento State students walk or bike past his store to get to a nearby light-rail station. Business has picked up, and he expects to break even on monthly expenses soon.
Newsome doesn’t rely solely upon repair services for revenue. His “ninjas” also can unlock cellphones for consumers who want to use their phone with a different carrier.
“Sac State gets a lot of international students,” said Newsome, a graduate of the university, “and they want a phone that works here as well as back home. They can buy an inexpensive phone here, and we can activate it to give them a plan that works around the globe.”
In addition, Gadget Ninja buys, refurbishes and resells cellphones, and it sells damaged cellphone screens to a recycling business that can repair and resell them.
On average, Americans keep their smartphones for about two years before they’re in the market for a new one, according to the NPD Group, a market research firm. Salazar said he thinks the prices of high-end cellphones would have to drop by more than half before consumers will see the value of replacement vs. repair.
“Normally, these things are at least $600, so consumers will fix them all day because they’re so expensive,” the Bella Vista High School grad said. “But we’ve broadened out, and we repair game systems and tablet screens. ... When we opened, all these tablets didn’t exist.”
The bottom line: Salazar and Newsome think there will always be a need for technicians who can repair the latest gadgets. The nice thing is that the stores don’t require much square footage because the replacement parts are so tiny, Newsome said.