If there is one mantra we keep repeating in our analysis it is that it is essential that retailers have a strong online offer to complement what they do in-store.

We were struck recently by the Darty results which were not, in themselves poor, but Darty revealed that online growth was only 10%. For a business coming from a very low base, that is disappointing.

In fact one of the findings in Mintel’s recent report on Electricals Retailers - France, February 2015, was that few store based retailers have made much progress online, in spite of having had transactional sites for some time.

Amazon dominant

Amazon is a long way in the lead. In fact it gains almost as many customers online as Darty does in-store. France is not unusual in this. It’s a general criticism of electricals retailers around Europe that they saw the threat from online retailing too late and then left it too long to respond.

Fnac has been the most successful of the store based retailers and it deserves credit for that. In many ways it was the most vulnerable electricals retailer because of its strengths in recorded music and books as well as anything computer related and brown goods.

But has Darty been so successful? Just 11% of customers have bought from it online and Darty is a well ahead of Boulanger.

Figure 1: Buyers of electricals, online or in-store, January 2015
Base: 2,000 internet users aged 16+
[graphic: image 1]
Source: Lightspeed GMI/Mintel

A little context

  • 83% of internet users aged over 16 had bought electricals during the year.

  • 75% had bought in-store and 55% had bought online. (The proportions are of the whole sample – 90% and 66% of those who bought electricals). Half of the online buyers were from Amazon.

So most internet users have bought electrical goods from more than one retailer over the last year

  • On average Internet users had bought from 3 different sorts of retailers – on-store or online.

  • In-store buyers had used 2.4 different retailers and online buyers 2.0, but that difference is to be expected given how many more people bought in-store.

  • But half of all online buyers bought from Amazon, take that element out and the rest are thinly spread

So what?

Clearly the fact that this is an internet survey introduces a small bias in favour of online buyers, but one shouldn’t exaggerate that effect in France where online is already well developed.

Amazon has developed a dominant position in the market and this is something that the store based retailers have to challenge. We can’t analyse the detail of how much people spent online with each retailer. But we know that Darty’s online sales were 18% of turnover in its third quarter, though that is a group figure and includes the Mistergooddeal online business which Darty bought for €2m in April 2014 and whose sales in 2013 of €121m were actually lower than in 2012. Mistergooddeal accounts for a little over 3% of group sales and Darty’s own online business is under 15% of sales.

However, 15% of sales compares with a third of electricals buyers who bought something from Darty online and that brings us back to the lacklustre online growth of only 10% in the third quarter sales figures.

It’s not just Darty that is in this position, but all these numbers show how the store based retailers are lagging behind online. They need to fight back against Amazon and capitalise on the advantage they have in operating stores. But, paradoxically, one way they need to do this is to fight back online as well. The retailer of the future must be outstanding both in-store and online.

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