Why Dixons doesn’t want you to buy a TV ever again
THE boss of Dixons Carphone is hoping to transform the way customers buy Tvs by encouraging them to sign up for sets and other white goods.
in what many see as a return to old-fashioned lease arrangements, seb James, chief executive of the electricals retailer, plans to encourage customers to become ‘members’ of a club that allows them to pay a monthly fee in exchange for certain appliances and TV packages, such as netflix.
Customers would lease as many products as they wanted and if they broke, Dixons Carphone would agree to repair or replace them. Every few years, customers would get an upgrade, the company said.
no pricing for the new deals has been announced yet but James said: ‘People are increasingly wanting usage rather than ownership. We’ll think about our customers in a different way.
‘it will be about how you recruit members to your business rather than how you sell another TV.
‘in Greece a lot of customers are effectively already doing this. it is not just people who have a low income, we’ll do it for everybody. We can deliver to a high degree and there is demand.’
However, shareholders didn’t react quite so positively to the news, and the stock dived 6.3pc, or 21.2p to 315p.
James unveiled the strategy as Dixons Carphone announced a 6pc boost in UK trading over the ten weeks to January 7.
the retailer confirmed expectations for a hike in annual profits in line with market forecasts of between £475m and £495m for the year to april 29. sales in the nordic countries were 1pc lower, while sales in southern Europe were up 5pc.
Demand for large-screen televisions was robust, the company said, but sales of phones and tablets were hit by ‘patchy availability’ of larger models. there has been a screen shortage which has hurt manufacturing, Dixons Carphone said.
James said around 30pc of shoppers buying phones wanted the very large models, such as the samsung note and Google Pixel XL, but they were in ‘short supply’.
James said: ‘Patchy availability of the larger, higher margin phones and tablets made these categories tougher this year but – on the other hand – offers up opportunities for next year where we do not expect the same issues.’
the firm wants to set itself apart from its rivals, and its new initiative is aimed at encouraging customer loyalty. Part of its strategy to combat amazon and argos will see further focus on delivery times to customers – with orders arriving in just a few hours launched in some areas.
‘Delivery is going to be a big battlefield in the year ahead,’ said James.
Dixons Carphone has been overhauling its UK stores, introducing more accessories, nespresso coffee bars and repair centres. However, it closed 71 UK stores during the year, and plans to close eight more.
George salmon, equity analyst at Hargreaves Lansdown, cautioned 2017 may prove more challenging for the retailer.
‘While it enjoys a key advantage in being the last remaining retailer of any scale that customers can visit to buy those must-have electronics, sterling’s weakness makes it increasingly difficult to sell its imported items at knock-down prices and stay competitive with the likes of amazon.’