UK Electricals Retailers 2011

The electricals sector remains one of the toughest and most competitive areas of UK retail. However, with a number of larger players ceding share, opportunities remain for growth. Therefore, a number of smaller players and new entrants are still managing to achieve impressive gains in share, through developing compelling offers that strike a chord with the consumer.

Features and benefits

- Market size, sales and growth rates to 2011 for the electricals market overall and for seven subcategories
- Comprehensive profiles of all significant UK electricals retailers including Amazon, Argos, Asda, Best Buy, Comet, Dixons, GAME, John Lewis and Tesco
- 2006-2011 market share data for all major sector participants
- Space allocation data for all key retailers for 28 product categories
- Key operating statistics, such as sales, profits, densities and margins, for all the sector's major players

Highlights

- The UK electricals market has suffered some of the heaviest declines in retail over the past few years, with sales forecast to have fallen by £2.5bn in 2011 in comparison to 2008. Despite the (unconvincing) emergence from the recession and the popularity of some new products, such as tablet PCs, there remain a number of inhibitors to growth.
- Despite the weaknesses of the sector, an array of big name retailers continue to target it as an area for growth. These retailers believe that by leveraging their understanding of retail to create multichannel offers, providing consumers with both value and high levels of service, they will be able to grow sales even in such a difficult market.
- With margins still in recovery, it will be increasingly important for electricals retailers to trade shoppers up the range architecture. Indeed, retailers such as Dixons are now implementing strategies to boost revenues that involve improving customer service and store environments to boost conversion rates, basket sizes and average ticket prices.

Your key questions answered

- What are the major players doing to protect themselves against the changing dynamics of this rapidly evolving market?
- How will the market perform over the next year and what are the opportunities offered by individual product categories?
- What are the strengths and weaknesses of all the significant players in the UK electricals market? SHOW LESS READ MORE >

TABLE OF CONTENTS
Overview 1
Summary 1
Executive Summary 2
Electricals one of weakest areas of UK retail 2
Deflation eases 2
Poor housing market will continue to suppress sales of large appliances 2
Some product areas are stabilising, but others face renewed weakness 2
Lack of dominance by leading retailers encourages others to go for growth 3
Specialists enjoy renaissance led by mid-size operators 3
Grocers continue to gain share, but momentum stalls slightly 3
Online pureplayers gains moderate 3
Retailers must work at trading shoppers up … 3
… and capitalise on new technology 4
Key Issues 23
Retailers act to repair margins 23
Margins under increasing pressure in recent years 23
Retailers are now working hard to restore profitability through lower costs … 24
… and persuading shoppers to spend more 24
Decline in contract purchasing 25
Contract purchasing grew hugely … 25
… until early 2010 26
Traditional retail purchases will dominate in short term 26
Pipeline of new technology strengthens 27
Days of fast flowing new product pipeline are gone 27
Over the last three years this has slowed markedly 27
Signs of improvements on horizon – led by 3D technology 28
TVs not the only product set for 3D makeover 28
Gradual improvement of other technologies will also grow sales 28
Changing role of online 29
Online sales growth continues to slow 29
Pureplay retailers struggle to trade consumers up 29
White goods a struggle too 30
Symbiotic relationships increase 30
DRL largest white label operator in white goods 30
Housing market remains weak 32
House prices to fall further 32
Impact on electricals 32
Market Analysis 34
Market definition 34
Overview 35
Recession exacerbates market downturn 35
Expenditure analysis by sub-sector 37
Brown goods have peaked as a proportion of total 37
Brown goods: audio-visual equipment 39
Growth to slow, but category remains resilient 39
Brown goods: games consoles & software 42
Beginnings of long term decline 42
Brown goods: photographic & optical equipment 45
Widespread ownership sees end of boom 45
White goods: major household appliances 48
VAT rise and stable volumes on 2010 sees market achieve very slight growth 48
White goods: minor household appliances 50
Slow and steady recovery 50
Grey goods: information processing equipment 52
Cheap new technology undermines market 52
Grey goods: telephone & fax equipment 54
Squeezed at both ends 54
Electricals specialists 57
Non-specialists continue to ramp up pressure 57
Channels of distribution 59
Grocers, online players and Argos grab share 59
Company Data Analysis 61
Advertising spend 65
Amazon 67
Ups market share by broadening customer offer 67
Recent key events 68
New categories drive growth 68
Management changes 69
Proposition 70
Becoming the online department store 70
Financials 70
Double digit growth rates maintained 70
Sector performance – electricals 73
Double digit growth continues albeit at a slower rate 73
Market share 74
Continuing gains 74
Outlook 75
Needs to consider new growth opportunities 75
Apple 77
Brand goes from strength to strength 77
Recent key events 78
Extends Apple brand globally 78
Proposition 80
Revolutionising the retailing of technology products 80
Financials 81
Consistently high growth rates 81
Space 83
Extends portfolio in prime shopping locations 83
Sector performance – electricals 84
Steady climb upwards 84
Market share 85
Steadily increases 85
Outlook 86
Sales to outstrip rivals 86
Argos 87
Economic headwinds stunt Argos' growth 87
Recent key events 88
Investment in key areas of business 88
Proposition 90
Multichannel model 90
Financials 91
Growth stutters with like-for-like in reverse 91
Space 94
Argos estate gradually expands 94
Sector performance – electricals 95
Space allocation 95
Low price points keep sales resilient through harsh conditions 96
Market share 97
To level off 97
Outlook 98
Scale of operations will help but future problems loom 98
Asda 100
Multichannel and multi-format growth 100
Recent key events 101
New initiatives support growth 101
Proposition 103
Every day value and convenience key 103
Financials 104
Sales growth accelerates during downturn 104
Space 108
Space expansion and rising densities both help growth 108
Sector performance – electricals 109
Space allocation 109
Continues to drive impressive year-on-year uplifts 111
Market share 112
Gains continue unabated 112
Outlook 113
Danger from growing competition and future economic recovery 113
Best Buy Europe 115
Builds brand in UK 115
Recent key events 116
Best Buy begins assault on Europe 116
Proposition 118
Develops stores and online 118
Financials 119
Rebuilds operating margins 119
Space 122
Space growth driven by larger formats 122
Sector performance – electricals 123
Sales accelerate from a low base 123
Market share 124
Growing albeit from a low base 124
Outlook 125
Still sub scale in the UK with challenges ahead 125
Comet 126
Service and online are key for Comet in an intensifying market 126
Recent key events 127
Rebranding but finds life tough 127
Proposition 129
Needs to enforce its credentials in consumer electricals 129
Financials 130
Comet feels impact of weak demand in white goods 130
Space 133
Maximizes existing space returns as it rightsizes its estate 133
Sector performance – electricals 134
Space allocation 134
Decline in sales slows 136
Market share 137
Increases in challenging market 137
Outlook 138
Set to benefit from white goods recovery 138
Dixons Group 140
Reinvents the business 140
Recent key events 141
Renewal and transformation continues to build momentum 141
Propositions 144
Clearer retail propositions by fascia 144
Financials 148
Stabilising sales picture 148
Space 152
Rationalisation of the store estate 152
Space allocation 153
Sector performance – electricals 155
Challenging market place 155
Market share 156
Stabilises 156
Outlook 157
Challenges remain for more focused business with strategic vision 157
Game 159
Suffers from downturn in core video game market 159
Recent key events 160
Turbulent times for new management team 160
Proposition 162
Specialist able to capitalise on market leading credentials 162
Financials 163
2008/09 is a towering peak 163
Space 166
Store portfolio being downsized 166
Sector performance – electricals 168
Space allocation 168
Q4 will be crucial to offset poor 2009 170
Market share 171
On slippery slope 171
Outlook 172
GAME will need to reinvent itself long term 172
John Lewis 174
Wins market share through new formats, online and service 174
Recent key events 175
Finding ways to drive sales 175
Proposition 177
Reinforces value and quality message 177
Financials 178
Pace of growth moves up through gears 178
Space 181
Invests in alternative formats as development pipeline slows 181
Sector performance – electricals 182
Space allocation 182
Strong proposition, reputation and brand ensures sales gains 183
Market share 184
Keeps rising 184
Outlook 185
Well prepared for recovery 185
Tesco 187
Gains share fast 187
Recent key events 188
Continuous initiatives to ride out of the recession on top 188
Proposition 190
Strengthening price architecture a major focus 190
Financials 191
Trading performance defies recession 191
Considerable growth across sales and profit 192
Space 194
Sustains space growth despite recession 194
Sector performance – electricals 195
Space allocation 195
Electricals outperforming total non-food 197
Market share 198
Gains continue 198
Outlook 199
Focus on non-food and loyalty will help maintain share as competition intensifies 199
Mail order & online players 201
Dabs (www.dabs.com) 201
eBay 204
Play.com 206
Shop Direct Group 209
Manufacturer Retailers 212
Overview 212
Another route to sales for manufacturers but compelling retail offer is challenging 212
Bang & Olufsen 214
Struggles in economic downturn 214
Panasonic 214
Strategy to improve on recent disappointing performances 214
Sony 215
Focus on latest technology and gaming market partly insulate it from sharp declines 215
Mobile Phone Retailers 217
Overview 217
Phones 4U 217
Network operator stores 218
Outlook 220
Competition to become much fiercer 220
Service more important for mobile phone retailers 220
Non-specialists to pose greater threat 221
Specialists use concessions to gain presence out-of-town 221
Smaller Electricals Specialists 222
Jessops 222
Specialises in cameras and photographic equipment 222
Following steady decline Jessops share has started to level out 222
Latest financial information hides how challenging recent trading has been 223
Stores acquired by Snap Equity in Jessops liquidation 223
Service key in turnaround strategy 224
Improves website 224
Accelerates refurbishment 224
Outlook still challenging 224
Maplin 226
Specialises in electricals components 226
Private equity backs rapid expansion 226
KPMG strategic review could lead to sale 227
Expansion and niche offer behind market share growth 227
Sales via stores counterbalance weak performance of online and mail order 227
Maplin turns to m-commerce to revive online 228
Profitability improves 228
Richer Sounds 229
Richer Sounds carves specialist niche 229
Consistent uplifts in share 230
Strong sales uplifts 230
Growth through existing space 230
Exceptional customer service 231
Price competitive 231
Outlook for exceptional performance to continue 231
APPENDIX 232
Ask the analyst 232
Global Retail FreeView 232
Verdict consulting 232
Disclaimer 232

TABLE OF FIGURES
Figure 1: Factors applying pressure to electricals retailers margins 2011 23
Figure 2: Contract purchasing 2011 25
Figure 3: 3D TV 2011 27
Figure 4: Electricals year-on-year sales growth online 2006–14e 29
Figure 5: Quarterly housing transactions vs electricals sales growth 2005 Q2–2010 Q3 32
Figure 6: Price inflation/deflation in total retail and electricals 2000–11e 36
Figure 7: Electricals market composition 2011e 37
Figure 8: Electricals sub sector shares 2006 and 2011e 38
Figure 9: Audio-visual goods share of electricals market 2009–11e 40
Figure 10: Games consoles & software share of electricals market 2009–11e 43
Figure 11: Photographic & optical equipment share of electricals market 2009–11e 46
Figure 12: Major household appliances share of electricals market 2009–11e 49
Figure 13: Minor household appliances share of electricals market 2009–11e 51
Figure 14: Information processing equipment share of electricals market 2009–11e 53
Figure 15: Telephone & fax share of electricals market 2009–11e 55
Figure 16: Electricals specialists sales, space and stores 2009–11e 58
Figure 17: Amazon.co.uk 2011 67
Figure 18: Amazon estimated UK sales and growth to December 2006–11 72
Figure 19: Amazon estimated electricals sales for calendar years 2006–11 73
Figure 20: Amazon electricals market share 2006–11e 74
Figure 21: Apple fascia in Regent Street, London 2011 77
Figure 22: Apple UK retail sales and growth to September 2006–11e 81
Figure 23: Apple estimated electricals sales for calendar years 2006–11e 84
Figure 24: Apple electricals market share 2006–11e 85
Figure 25: Argos catalogue 2010 87
Figure 26: Argos retail sales and growth to February 2006–11e 92
Figure 27: Argos operating profit to February 2006–10e 92
Figure 28: Argos estimated electrical sales calendar years 2006–11 96
Figure 29: Argos electricals market share 2006–11e 97
Figure 30: Asda fascia 2010 100
Figure 31: Asda UK retail sales growth year to December 2006–11e 105
Figure 32: Asda UK retail operating profit to December 2005–09 105
Figure 33: Asda estimated electricals sales calendar years 2006–11e 111
Figure 34: Asda electricals market share 2006–11e 112
Figure 35: Best Buy Europe fascia 2011 115
Figure 36: Best Buy Europe retail sales and growth to March 2007–11e 120
Figure 37: Best Buy Europe operating profit to March 2007–11e 120
Figure 38: Best Buy UK estimated electricals sales for calendar years 2007–11 123
Figure 39: Best Buy UK electricals market share 2007–11e 124
Figure 40: Comet fascia 2010 126
Figure 41: Comet retail sales and growth to April 2006–11e 131
Figure 42: Comet retail profit to April 2006–10e 131
Figure 43: Comet estimated electricals sales calendar years 2006–11 136
Figure 44: Comet electricals market share 2006–11e 137
Figure 45: Dixons Retail group logo 2011 140
Figure 46: Dixons Retail UK & Eire sales and growth to April 2006–11 149
Figure 47: Dixons Retail UK & Eire operating profit and growth to April 2006–10 150
Figure 48: Dixons Retail UK estimated electricals sales for calendar years 2006–11e 155
Figure 49: Dixons Retail share of UK electricals market 2006–11e 156
Figure 50: GAME 2010 159
Figure 51: GAME UK & Ireland sales and growth to January 2006–11e 164
Figure 52: GAME UK & Ireland operating profit and growth to January 2006–10e 164
Figure 53: GAME Group estimated electricals sales calendar years 2006–11e 170
Figure 54: GAME Group electricals market share 2006–11e 171
Figure 55: John Lewis 2010 174
Figure 56: John Lewis sales and growth to January 2006–11e 178
Figure 57: John Lewis UK operating profit to January 2006–10 179
Figure 58: John Lewis estimated electricals sales calendar years 2006–11 183
Figure 59: John Lewis electricals market share 2006–11 184
Figure 60: Tesco fascia 2010 187
Figure 61: Tesco UK estimated retail sales and growth to February 2006–11e 192
Figure 62: Tesco UK operating profit to February 2006–10 192
Figure 63: Tesco estimated electricals sales calendar years 2006–11e 197
Figure 64: Tesco electricals market share 2006–11e 198
Figure 65: Dabs electricals market share 2006–11e 202
Figure 66: Play.com electricals market share 2006–11e 207
Figure 67: Shop Direct electricals market share 2006–11e 210
Figure 68: Jessops electricals market share 2006–11e 223
Figure 69: Maplin electricals market share 2006–11e 227
Figure 70: Richer Sounds electricals market share 2006–11e 230

TABLE OF TABLES
Table 1: Electricals market definition 2011 34
Table 2: Total consumer expenditure on electrical goods 2000–11e 35
Table 3: Audio-visual equipment expenditure 2006–11e 39
Table 4: Games consoles & software expenditure 2006–11e 42
Table 5: Photographic & optical equipment expenditure 2006–11e 45
Table 6: Major household appliances expenditure 2006–11e 48
Table 7: Minor household appliances expenditure 2006–11e 50
Table 8: Information processing expenditure 2006–11e 52
Table 9: Telephone & fax expenditure 2006–11e 54
Table 10: Electricals specialists sales, space and stores 2006–11e 57
Table 11: Electricals channels of distribution 2006 and 2011e 59
Table 12: UK electricals retailers market shares 2006–11e 61
Table 13: Major UK electricals retailers key operating statistics – trading 2009/10 64
Table 14: Major UK electricals retailers key operating statistics – space 2009/10 64
Table 15: Comet and Dixons Retail UK advertising spends 2006–09 65
Table 16: Comet and Dixons Retail UK advertising spend by media 2009 66
Table 17: Amazon company overview 2011 67
Table 18: Amazon retail proposition 2011 70
Table 19:: Amazon UK key operating statistics summary 2006–11e 70
Table 20: Apple company overview 2011 77
Table 21: Apple retail proposition 2011 80
Table 22: Apple UK key operating statistics 2006–11e 81
Table 23: Apple UK store portfolio 2005–11e 83
Table 24: Argos company overview 2011 87
Table 25: Argos retail proposition 2011 90
Table 26: Argos key operating statistics 2006–11e 91
Table 27: Argos UK & Eire trading record 2001–11e 93
Table 28: Argos UK & Eire store portfolio 2000–11e 94
Table 29: Argos space allocation (Autumn/ Winter catalogue) 2010 95
Table 30: Asda company overview 2011 100
Table 31: Asda retail proposition 2011 103
Table 32: Asda UK key operating statistics 2006–11e 104
Table 33: Asda UK trading record 2001–11e 107
Table 34: Asda UK store portfolio 2001–11e 108
Table 35: Asda Wal-Mart Supercentre space allocation 2010 109
Table 36: Best Buy Europe company overview, 2011 115
Table 37: Best Buy Europe proposition 2011 118
Table 38: Best Buy Europe key operating statistics 2007–11e 119
Table 39: Best Buy Europe store portfolio 2006–11e 122
Table 40: Comet company overview 2011 126
Table 41: Comet retail proposition 2011 129
Table 42: Comet UK key operating statistics 2006–11e 130
Table 43: Comet trading record 2001–11e 132
Table 44: Comet store portfolio 2001–11e 133
Table 45: Comet space allocation 2011 134
Table 46: Dixons Retail company overview 2011 140
Table 47: Currys retail proposition 2011 144
Table 48: Currys.digital retail proposition 2011 145
Table 49: Dixons.co.uk retail proposition 2011 146
Table 50: PC World retail proposition 2011 147
Table 51: Dixons Retail group and UK & Eire key operating statistics 2006–11e 148
Table 52: Dixons UK & Eire trading record 2003–11e 150
Table 53: Dixons Retail UK & Eire store portfolio 2001–11e 152
Table 54: Dixons Retail UK brands space allocation 2010 153
Table 55: GAME company overview 2011 159
Table 56: GAME Group retail proposition 2011 162
Table 57: GAME Group UK & Eire key operating statistics 2006–11e 163
Table 58: GAME Group trading record 2001–11e 165
Table 59: GAME Group store portfolio 2000–11e 166
Table 60: GAME Group store numbers 2001–10 167
Table 61: GAME Group space allocation to brown, grey and white goods 2010 168
Table 62: GAME space allocation 2010 168
Table 63: Gamestation space allocation 2010 169
Table 64: John Lewis company overview 2011 174
Table 65: John Lewis retail proposition 2011 177
Table 66: John Lewis department stores key operating statistics 2006–11e 178
Table 67: John Lewis trading record 2001–11e 180
Table 68: John Lewis store portfolio 2001–11e 181
Table 69: John Lewis space allocation 2010 182
Table 70: Tesco company overview 2011 187
Table 71: Tesco retail proposition 2011 190
Table 72: Tesco UK key operating statistics 2006–11e 191
Table 73: Tesco UK trading record 2001–11e 193
Table 74: Tesco UK store portfolio 2001–11e 194
Table 75: Tesco Extra space allocation 2010 195
Table 76: Dabs key operating statistics 2006–11e 201
Table 77: eBay key operating statistics 2006–10e 204
Table 78: Play.com key operating statistics 2006–11e 206
Table 79: Shop Direct key operating statistics 2006–11e 209
Table 80: SWOT analysis of manufacturer branded retail stores 2011 213
Table 81: Jessops key operating statistics 2006–11e 222
Table 82: Maplin key operating statistics 2006–11e 226
Table 83: Richer Sounds key operating statistics 2006–11e 229