Author: Mintel Group Ltd.
Last saved by: HTTP server

UK Retail Briefing - June 2015
Analyst Comment
 
FIGHTING BACK AGAINST THE WEB
The fourth quarter figures from Dixons Carphone warehouse were very good indeed – like for like sales were up 13% in the UK.

The figures cover both the Currys and Carphone warehouse chains, but both must have been doing exceptionally well.

Nor was there anything special going on in the market at the time. iPhone 6 was launched back in September 2014. Tablets are yesterday’s story and there is nothing very special going in in either white or brown goods, although the strong housing market must have helped the former.

Nor do we think that the performance owes anything to the longer term trends which were used to justify the merger in the first place – convergence in technology and the Internet of things

The conclusion
So the inescapable conclusion is that Dixons Carphone’s strategy is working and working very well indeed.

There are two elements to this strategy:

●	Price match online. Currys now price matches Amazon, though not any maverick marketplace operators.
●	Build great in-store service to complement the great new store design.

Currys outperforming
The ONS data for Dixons Carphone’s 4th quarter shows the market up by 5%. Argos whose quarter runs to the end of May rather than the end of April reported a like-for-like decline of 3.9%, blaming a tough electricals market. AO.com reported sales up 24%, though this represented a slowdown during the year and was seen as disappointing by the City.

Service
Mintel’s consumer research is not as helpful here as one would like. In general relatively few people said that they valued in-store advice, though Currys shoppers (and Apple store shoppers) valued it most.

Looking forward
For too long, the online retailers have had it too easy in electricals. The store based retailers were in disarray and the online players, led by Amazon, focussed on low prices and took a huge share of the market. About a quarter of electricals are sold by online pure players and they account for about 40% of all online sales. It’s true that electricals are well suited to being sold online because they are mostly sold on specification and are especially attractive online if they are cheaper there as well.

But as Dixons is showing, store based retailers can fight back. The price differential against online retailers had, in any case, been eroded and one gets a very strong impression that the major online players are now putting more emphasis on making profits.

Online retailers of electricals are not going to disappear, for goods bought on specification they are just too convenient. And convenience is a powerful driver in retailing. But it does look as if the low point in the fortunes of store based electricals retailers has now been passed.

This report is supplied in accordance with Mintel's terms and conditions.  
© Mintel Group Ltd.