Electrical Goods Retailing - UK - February 2014


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Mintel

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Mid-market store-based retailers will have to come up with genuinely compelling reasons for shoppers to migrate back from pureplays: we think multichannel retailers need to imitate Amazon’s spirit of innovation, as their service and convenience advantages wane fast.
Table of Content

Introduction

A diverse and fragmented market
Consumer questions
Definitions
Financial definitions
VAT
Sales per store, sales per sq m
Exchange rates
Abbreviations

Executive Summary

The market
Figure 1: Consumer spending on all electrical products: market size and forecast (incl. VAT), 2008-18
Online
Figure 2: Online sales as percentage of total market for electrical goods, 2012-14
Figure 3: Leading online retailers’ estimated shares of online spending on electrical goods, 2013
Distribution of spending
Figure 4: Estimated distribution of spending on electrical goods, 2013
Market shares
Figure 5: Market shares (%): The leading specialist and non-specialist retailers, 2012 and 2013
The consumer: what they’ve bought
Figure 6: The consumer: What electrical products they have bought in the past 12 months, November 2013
The consumer: where they’ve shopped
Figure 7: The consumer: Where they bought electrical products, in-store or online, in the past 12 months, November 2013
The consumer: key drivers
Figure 8: The consumer: What’s important when choosing where to buy electrical goods, November 2013
The consumer: satisfaction with services used
Figure 9: The consumer: Satisfaction with retailers’ services used, November 2013
The consumer: attitudes towards electricals retailers
Figure 10: The consumer: Attitudes towards electrical goods retailers, November 2013
What we think

Issues and Insights

A strong case for generalists in a mixed market
The facts
The implications
Pureplays are winning, stores must innovate
The facts
The implications
Limited demand for pre-sales service
The facts
The implications
Don’t overlook simplicity
The facts
The implications

Trend Applications

Trend: FSTR HYPR
Trend: Experience Is All
Mintel Futures: Old Gold

Market Size and Forecast

Key points
The beginnings of recovery
Figure 11: Consumer spending on all electrical products: market size and forecast (incl. VAT), 2008-18
Figure 12: Electrical products: market size and forecast (incl. VAT), in current and constant prices, 2008-18
Figure 13: Annual consumer prices inflation, 2013
Segment forecasts: not all categories set for growth
Household appliances: benefiting from the housing-market bounce
Figure 14: Household appliances: segment size and forecast (incl. VAT), 2008-18
Computing and telecoms: deflation a constant problem
Figure 15: Computing and telecoms goods: segment size and forecast (incl. VAT), 2008-18
Audio-visual and photographic demand remains weak
Figure 16: Audio-visual and photographic goods: segment size and forecast (incl. VAT), 2008-18
Personal care appliances riding the vanity wave
Figure 17: Personal care appliances: segment size and forecast (incl. VAT), 2008-18
Segment forecasts: annual data
Figure 18: Electrical goods segment forecasts (incl. VAT), 2008-18
Unit volumes snapshot
Figure 19: Unit volume sales of selected major electrical goods categories, 2012-14
Figure 20: Market definitions
Mintel’s forecast methodology

Specialists Sector Size

Key points
Comet’s closure hits the sector
Figure 21: Electrical goods specialists’ sector sales, 2008-14
A slowing of the relative decline in 2014
Figure 22: Electrical goods specialists sales relative to all consumer spending on electrical goods, 2008-14
Most of Comet’s sales lost to non-specialists
Figure 23: Selected retailers’ estimated gains of Comet’s annual sales, 2013
Enterprises, outlets and employment
Outlets
Figure 24: Number of retail outlets, 2008/09 – 2012/13
Enterprises and employment
Figure 25: Number of retail enterprises, 2008-12
Figure 26: Number of retail employees – average during the year, 2008-12

Strengths and Weaknesses

Strengths
Weaknesses
The Market Environment

Key points
Deflation plagues technology categories
Figure 27: Consumer prices inflation, January – December 2013
Squeezed incomes despite increased confidence
Figure 28: Annual % change in average earnings versus consumer prices index, January 2010 – November 2013
Confidence is much improved
Figure 29: Consumer confidence levels, January – December 2013
Property market revival
Figure 30: Number of UK residential property transactions, January – December 2013
Ageing population
Figure 31: Trends in the age structure of the UK population, 2013 and 2018
Renewed interest in baking boosts demand for kitchen electricals
Premiumisation in coffee helps demand for at-home machines
New technology cannibalising other categories
Ownership of electrical goods
Figure 32: Household ownership of electrical goods by category, 2011 and 2012
Figure 33: Household ownership of electrical goods by category, selected growth categories, 2008-12
Figure 34: Household ownership of electrical goods by category, selected declining categories, 2008-12

The Consumer – Where They Buy In-store or Online

Key points
What we asked
Where consumers buy
Figure 35: UK: Where they bought electrical products, in-store or online, November 2013
Trend data
Figure 36: Where they bought electrical products, ranked by popularity of retailer, April 2012, November 2012 and November 2013
Where they buy – offline/online split
figure 37: UK: Where they bought electrical products, in-store only or online only, November 2013
Who shops where
Figure 38: Where they bought electrical goods, by age and affluence, November 2013

The Consumer – What They Buy

Key points
What we asked
What they buy
Mobile phones are the most popular purchase
Figure 39: UK: what electrical products they buy, November 2013
Small kitchen/household appliances come second
What they buy by age and affluence
Figure 40: what they bought by age and affluence, November 2013
What they buy by gender
Figure 41: what they bought by age and affluence, November 2013

The Consumer – Key Drivers

Key points
What we asked
What motivates choices
Bargain hunters
Figure 42: UK: key drivers for electrical products shoppers, November 2013
Savvy consumers look for savings
Pre- and post-purchase support
Relative importance of key drivers
Figure 43: UK: Key drivers for electrical product shoppers in order of importance, November 2013
Figure 44: UK: key drivers and whether ranked most important, November 2013

The Consumer – Attitudes towards Retailers of Electrical Goods

Key points
What we asked
What consumers think
The internet empowers consumers
Figure 45: UK: Attitudes towards electrical goods retailers, November 2013
Retailers would do well to build and deepen trust
Multi-channel versus pureplay
Attitudes by age and affluence
Polarities by age
Figure 46: UK: Attitudes towards electrical goods retailers, by age and affluence, November 2013
What matters to older consumers
How else can online retailers connect to shoppers?
Attitudes by where they shop
Figure 47: Attitudes by where they shop, November 2013
Figure 48: Further attitudes by where they shop, November 2013

The Consumer – Satisfaction with Services Used

Key points
What we asked
Usage of services provided
Figure 49: UK: Usage of retailers services, November 2013
Satisfaction with services used
Figure 50: UK: Satisfaction with retailers services used, November 2013
Who is not satisfied with services used
Figure 51: UK: not satisfied with services by select demographic groups, November 2013

Who’s Innovating?

Key points
Encouraging customers to experiment with technology
Digital concept store
Figure 52: Argos, digital concept store, London
In-store guidance
In-store mobile cashback service
Digital wallet gives electrical goods customers additional confidence buying online
Samsung and Carphone Warehouse new store concept

Channels of Distribution

Key points
At a glance: pureplays now half as big as the specialists
Figure 53: Estimated distribution of spending on electrical goods, 2013
Pureplays gain big from Comet’s closure
Figure 54: Estimated distribution of spending on electrical goods, 2012 and 2013

Space Allocation Summary

Key points
Space allocations
Figure 55: Leading electricals retailers, summary space allocation, January 2014
Figure 56: Electricals retailers: detail space allocation estimates, January 2014
Trends
Currys High Street
Figure 57: Currys High street stores, space allocation, 2012-14
Currys/PC World superstores
Figure 58: Currys PC World superstores, space allocation, 2012-14
John Lewis
Figure 59: John Lewis electricals space allocation, 2012-14
Argos
Figure 60: Argos electricals space allocation, 2012-14

Retail Product Mix

Figure 61: leading electricals retailers, estimated sales mix, 2012/13
Market shares
Figure 62: Leading retailers market share of major categories, 2012

The Leading Specialist Retailers

Key points
Dixons dominates a cut-down specialists sector
Figure 63: The leading specialist retailers of electrical goods: total net revenues, 2008-12
Figure 64: The leading specialist retailers: compound annual growth rates in total net revenues, 2008-12
Outlets and sales per outlet
Figure 65: The leading specialist retailers of electrical goods: outlet numbers, 2008-12
Figure 66: The leading specialist retailers of electrical goods: annual sales per outlet, 2008-12
Figure 67: The leading specialist retailers: compound annual growth rates in annual sales per outlet, 2008-12
Operating profits and margins
Figure 68: The leading specialist retailers of electrical goods: operating profit, 2008-12
Figure 69: The leading specialist retailers of electrical goods: operating margins, 2008-12
Sales area and sales densities
Figure 70: Selected leading specialist retailers of electrical goods: total sales area, 2008-12
Figure 71: Selected leading specialist retailers of electrical goods: annual sales per sq m, 2008-12

The Leading Non-Specialist Retailers

Key points
Amazon and Argos battle for leadership
Sales: Amazon draws level
Figure 72: Leading non-specialist retailers’ sales of electrical/electronic goods (excl. VAT), 2011 -13
Stores are a strength for Argos
Figure 73: Leading non-specialist retailers’ store numbers, 2011-13
The consumer: Argos maintains a lead for now
Figure 74: The consumer: Where they have shopped for electrical products in the past 12 months, whether in-store or online, November 2013

Market Shares

Key points
Dixons and Amazon grow faster than Argos in 2013
Figure 75: Market shares (%): The leading specialist and non-specialist retailers, 2012 and 2013
Figure 76: Market shares: The leading specialist and non-specialist retailers, 2012 and 2013

Online

Key points
Online market size surges in 2013
Figure 77: Estimated online sales of electrical goods (incl. VAT), 2011-14
Online under-indexes relative to shopper numbers
Figure 78: Balance of shopper numbers by in-store/online and split of sales of electrical goods by in-store/online, 2013
The retailers online: Amazon is dominant
Figure 79: Leading online retailers’ estimated shares of online spending on electrical goods, 2013
The consumer
Where they shop: Amazon’s strong lead confirmed
Figure 80: The consumer: Where consumers have bought online in the past 12 months, November 2013
Figure 81: The consumer: Percentage buying online and in-store, by region, November 2013
Figure 82: The consumer: Percentage buying online and in-store, by age group, November 2013
Attitudes to online shopping and pureplay retailers
Figure 83: The consumer: Attitudes towards electrical goods retailers, November 2013
Visitor numbers: Apple leads
Figure 84: Electrical retail websites’ UK visitor numbers, most popular websites ranked by total unique visitors, December 2013
Leading sites’ visitor profiles
Figure 85: Selected leading websites: profiles by age group, December 2013
Figure 86: Selected leading websites: profiles by socio-economic group, December 2013
Figure 87: Selected leading websites: profiles by gender, December 2013

Advertising and Promotion

Key points
Leading advertisers
Figure 88: Leading electrical products retailers’ advertising spend, 2009-13
Spending relative to turnover
Figure 89: Leading electrical products specialists’ advertising spend as % of sales, 2009-12
Spending by media
Figure 90: Leading electrical products retailers’ advertising spend, by media type, 2013
What we saw in 2013
Tech and service credentials
Black Friday and Christmas
Promoting new products
Online promotions

Brand Research

Brand map
Figure 91: Attitudes towards and usage of brands in the electrical retailing sector, November 2013
Correspondence analysis
Brand attitudes
Figure 92: Attitudes, by electrical retailing brand, November 2013
Brand personality
Figure 93: Electrical retailing brand personality – macro image, November 2013
Figure 94: Electrical retailing brand personality – micro image, November 2013
Brand experience
Figure 95: Electrical retailing brand usage, November 2013
Figure 96: Satisfaction with various electrical retailing brands, November 2013
Figure 97: Consideration of electrical retailing brands, November 2013
Figure 98: Consumer perceptions of current electrical retailing brand performance, November 2013
Brand index
Figure 99: Electrical retailing brand index, November 2013
Target group analysis
Figure 100: Target groups, November 2013
Figure 101: Electrical retailing brand usage, by target groups, November 2013
Group One – Conformists
Group Two – Simply the Best
Group Three – Shelf Stalkers
Group Four – Habitual Shoppers
Group Five – Individualists

Amazon Europe

What we think
Ease of transaction, excellence of fulfilment
€8 billion electricals sales
A brand as well as a retailer
Popularity across Europe
Figure 102: The consumer: Percentage of respondents having bought electrical goods from Amazon in the past 12 months, November 2013
Company background
Company performance
Figure 103: Amazon Europe: Group sales performance, excl. sales tax, 2008-13
Retail offering
Figure 104: Number of products listed on Amazon.co.uk, by category, December 2013
Figure 105: Amazon.co.uk: Product mix, by number of SKUs, December 2013

Apple Retail

What we think
A slow-down in sales growth and innovation
What’s ahead?
Ahrendts: Innovation and customer experience
Starting young
Stores remain impressive
Company background
Company performance
Group sales growth slows
Retail sales growth falls as third party sellers gain share
Figure 106: Apple Retail: Financial performance, 2008-13
Figure 107: Apple Retail: European stores, 2012-14
Retail offering

Appliances Online/AO.com

What we think
Single-category focus brings risks
Gaining from Comet’s collapse
Figure 108: DRL Ltd: Share of online sales of all electrical goods, 2011/12 – 2013/14
But reasons to be optimistic
A generous valuation?
Company background
Company performance
Figure 109: Appliances Online/DRL Ltd: Group financial performance, 2008/9-2013/14
Retail offering
“White-label” provider
Figure 110: DRL Ltd’s white-label appliance sites and other affiliated sites, February 2014

Argos

What we think
A turnaround helped by Comet’s closure
Tapping growing categories
Own-brand tablet appears to underwhelm
Multichannel at the core of Argos
Reservations over new store format
Figure 111: Argos’s new-format store, Chancery Lane, London, January 2013
Leveraging customer data
Company background
Company performance
Figure 112: Argos: Group financial performance, 2008/9 – 2013/14
Figure 113: Argos: Estimated electrical goods sales, 2008/09 – 2013/14
Figure 114: Argos: Outlet data, 2008/9-2012/13
Retail offering
Figure 115: Number of products offered in the Argos catalogue, 2011/12 – 2012/13

Dixons Retail Plc

What we think
Company performance
Figure 116: Dixons retail group: Like-for-like growth, 2012/13, 2013/14
Figure 117: Dixons Retail Plc: Group financial performance, 2008/9-2012/13
Figure 118: Dixons Retail Plc: Outlet data, 2008/9-2012/13
Retail offering
Figure 119: Dixons retail: UK sales mix, 2012/13

E-Square

What we think
Company background
Figure 120: E-Square: Members and websites by country of operation, 2014
Figure 121: E-Square: Affiliated online stores, 2014
History
Company performance
Figure 122: E-Square: Members’ Estimated retail sales by country/region, 2011- m13
Figure 123: E-Square: Members’ approximate store numbers by country/region, 2011-13
Retail offering

Euronics International

What we think
Company background
Figure 124: Euronics: Members, countries and trading names, 2014
Company performance
Figure 125: Euronics International: Group sales performance (excl. VAT), 2009-13
Figure 126: Euronics International: Outlet data, 2009-13
Figure 127: Euronics International: Sales per outlet, 2009-13
Retail offering

Maplin Electronics Ltd

What we think
New trade fascia targeting small businesses
Strength lies on the high street
Working on female appeal
Online back on track
Gadget Man bolsters technical expertise reputation
Company background
Company performance
Figure 128: Maplin Electronics Ltd: Group financial performance, 2008-13
Figure 129: Maplin Electronics Ltd: Outlet data, 2008-13
Retail offering

Appendix – Brand Research

Figure 130: Brand usage, November 2013
Figure 131: Brand commitment, November 2013
Figure 132: Brand momentum, November 2013
Figure 133: Brand diversity, November 2013
Figure 134: Brand satisfaction, November 2013
Figure 135: Brand attitude, November 2013
Figure 136: Brand image – macro image, November 2013
Figure 137: Brand image – micro image, November 2013
Figure 138: Profile of target groups, by demographics, November 2013
Figure 139: Psychographic segmentation, by target groups, November 2013
Figure 140: Brand usage, by target groups, November 2013
Brand index
Figure 141: Brand index, November 2013

Appendix – The Consumer – Where They Buy Instore or Online

Figure 142: Most popular retailers used for electrical goods purchases – In-store/online, by demographics, November 2013
Figure 143: Next most popular retailers used for electrical goods purchases – In-store/online, by demographics, November 2013
Figure 144: Other retailers used for electrical goods purchases – In-store/online, by demographics, November 2013
Figure 145: Most popular retailers used for electrical goods purchases – In-store, by demographics, November 2013
Figure 146: Next most popular retailers used for electrical goods purchases – In-store, by demographics, November 2013
Figure 147: Other retailers used for electrical goods purchases – In-store, by demographics, November 2013
Figure 148: Most popular retailers used for electrical goods purchases – Online, by demographics, November 2013
Figure 149: Next most popular retailers used for electrical goods purchases – Online, by demographics, November 2013
Figure 150: Other retailers used for electrical goods purchases – Online, by demographics, November 2013

Appendix – The Consumer – What They Buy

Figure 151: Most popular types of electrical products purchased, by demographics, November 2013
Figure 152: Next most popular types of electrical products purchased, by demographics, November 2013
Figure 153: Other types of electrical products purchased, by demographics, November 2013

Appendix – The Consumer – Key Drivers

Figure 154: Factors important to electrical products shoppers – Special offers/sales, by demographics, November 2013
Figure 155: Factors important to electrical products shoppers – Matching other retailers' prices, by demographics, November 2013
Figure 156: Factors important to electrical products shoppers – Free delivery for large kitchen/household appliances, by demographics, November 2013
Figure 157: Factors important to electrical products shoppers – Extended warranty at no extra cost, by demographics, November 2013
Figure 158: Factors important to electrical products shoppers – Good after-sales service, by demographics, November 2013
Figure 159: Factors important to electrical products shoppers – Wide range of brands available, by demographics, November 2013
Figure 160: Factors important to electrical products shoppers – Ease of purchase, by demographics, November 2013

Appendix – The Consumer – Attitudes towards Retailers of Electrical Goods

Figure 161: Most popular attitudes towards electrical goods retailers, by demographics, November 2013
Figure 162: Next most popular attitudes towards electrical goods retailers, by demographics, November 2013

Appendix – The Consumer – Satisfaction with Services Used

Figure 163: Satisfaction with retailers' services/products – Click-and-collect^, by demographics, November 2013
Figure 164: Satisfaction with retailers' services/products – Home delivery service, by demographics, November 2013
Figure 165: Satisfaction with retailers' services/products – Extended warranty, by demographics, November 2013
Figure 166: Satisfaction with retailers' services/products – Product insurance, by demographics, November 2013
Figure 167: Satisfaction with retailers' services/products – Advice from retailers' staff, by demographics, November 2013
Figure 168: Satisfaction with retailers' services/products – Returning a product to the retailer, by demographics, November 2013
Figure 169: Satisfaction with retailers' services/products – Installation service, by demographics, November 2013
Figure 170: Satisfaction with retailers' services/products – Removal of old product^^, by demographics, November 2013
Figure 171: Satisfaction with retailers' services/products – Online live-chat helpline^^^, by demographics, November 2013