DSGi: The gloves come off

There can be few stronger contenders for the title of retail’s toughest job than the one John Browett took on last year.

The challenges of his first year in the role as DSGi chief executive have seemed endless: sliding like-for-like sales, problematic international markets, a renowned rival moving into the UK from overseas, and the minor matter of a looming recession.

But 11 months of struggle have not dimmed the former Tesco man’s enthusiasm. Having spent his lengthy gardening leave from the grocer exploring the world’s top electrical stores – from Japan’s Yodobashi to the US’s Best Buy and Europe’s Media Markt – he now spends Saturdays selling TVs in his company’s stores, where the intellectual ex-management consultant has developed what appears to be an encyclopaedic knowledge of the relative virtues of LCD and plasma screens.

What the many hours spent in the stores have taught him is that revitalising the shops and getting the retailer’s much-maligned service proposition right is going to be crucial to turning around the performance of DSGi. Today Browett tells Retail Week how he plans to do it.
“The history of this business is about product and price, not about service. It wasn’t running through the DNA of the business,” he says. “Customers said: ‘The problem with you guys is that you’re very inconsistent and don’t put the customer at the heart of the business’.”

Browett was speaking at DSGi’s new flagship Currys megastore in Birmingham, a 60,000 sq ft monster housing 17,000 lines, including 194 separate models of TV alone. By contrast, the old Currys that formerly stood on the same site carried only 4,000 lines in total.

Retail Week covered the radical new look of the store – a format first used in Scandinavia – in detail last month (Retail Week, October 24). It is designed to be easier to shop at than a traditional Currys, with better sight lines, clearer signage and boxed product ready to pick up from the shopfloor.

But the most important aspect from Browett’s point of view is the store offers a range that is both much broader and deeper than a typical Currys store and which, he claims, beats any specialist.

So from his perspective this format is not just about beating traditional rivals such as Comet or Argos, but specialist retailers such as Jessops or Richer Sounds too.

New categories have been launched, including a bewildering array of accessories, DVDs and games – of which Browett claims there is a bigger selection than in a Game store. Dedicated Apple and Microsoft areas – only the “third or fourth” in the UK – run by dedicated staff also feature prominently.

“We believe very large stores will work in the UK and the numbers are very encouraging,” says Browett. “We’re providing what the customer is missing, which is range. The best example is John Lewis – it sells a tiny proportion of what’s available in the UK but if you come in here, there’s no reason to go anywhere else.”

While it is still perfectly possible to buy products at entry price points, the range of top-end goods is noticeably bigger and more prominent than would traditionally be the case in a Currys store. There is a dedicated hi-fi room, showing off sophisticated home cinema equipment, much of it with eye-watering price tags. You can even buy a£1,749.99 Jura coffee machine, of which Browett admits “we’re not going to be selling huge volumes”.

He says the move into these products reflects the increasing sophistication of the electricals shopper, which he sees as an opportunity for DSGi. “This is not about disappearing into the esoteric. It’s saying to the mass market that these products are becoming more accessible and for a few pounds more you can have a materially better experience. The prices of some of these products haven’t gone up in 20 years,” he explains.
But this strategy only works if Currys has the staff to make a consultative sale based on thoroughly understanding the customer’s needs. With service having traditionally been DSGi’s Achilles heel, Browett knows that cracking this will be key to his success. His big issue is consistency. While there are examples of good service in the company’s stores, it is not consistent between stores, or even within the same store.

To tackle this fundamental problem he has introduced a retraining programme for all staff called Fives, focusing on five key areas such as engagement with the customer and need analysis. Browett claims it is working well and delivering dramatic improvements in sales when it is implemented, particularly in underperforming stores. Perhaps illustrative of the importance he places on this, Browett wears a Lance Armstrong-style Fives wristband.

He explains that the traditional, directional heavy sell is to be a thing of the past and that a more consultative sell, based on advice and discussion with the customer, will be the way of the future. Staff levels have been increased – the Birmingham megastore has 75 full-time equivalent employees and a total headcount of 150, double the previous number. He thinks there is a big opportunity to grow sales across the business based on the quality of service UK customers generally receive.

“Does any UK customer get great service?” he asks, declaring “the UK has a problem with service full stop”. When challenged with the name of John Lewis he is defiant. “John Lewis works for a certain type of customer but many others find it extremely alienating.”
Best Buy pointedly made an issue of service when it briefed analysts in Chicago last month on its plans for Europe, which will kick-off in this country next year. The retailer is renowned for the quality of its service in the US and Canada and thinks it will make the crucial difference that will ensure success here.

Best Buy has been a persistent thorn in Browett’s side since the US retailer stole his thunder in May by unveiling its plans for the UK just days before Browett revealed his long-awaited strategy for reviving DSGi. Best Buy has also made no secret that it thinks it can do a better job than DSGi.

Browett clearly finds all the excitement about Best Buy something of an annoyance. “What’s irritating is this fuel of PR before someone’s actually opened. In America you do get better service but that’s something about American culture – that’s not about DSGi. There’s a mixture of arrogance and naivety on other people’s part if they say this is a group of people who don’t know what they’re doing.

“Every single retailer that’s come to the UK has made the same mistakes. When Wal-Mart bought Asda people were saying it would put Tesco out of business. But retail is an incredibly local business – it’s very hard to unseat the locals.” Even with the weaker property market, Browett believes it will prove a challenge to find stores in the right locations. “Don’t let anyone tell you it’ll be easy to build a chain of out-of-town stores in the UK,” he says.

But he does admit that he is using the prospect of Best Buy to galvanise his teams into providing better service. “Internally I’m using the threat of a new entrant to drive the business forward,” he says.

That extra thrust will be needed in a market Browett describes as “bleak”. “It’s going to be a very difficult Christmas. We can see the impact and a fall in confidence across Europe. Spain is cataclysmic and even Norway – which probably has the most affluent customer base in the developed world – is feeling it.” He refuses to discuss the progress of his plans for the future of the southern and Eastern European businesses, which the company is reviewing.

To deal with tougher times, getting DSGi into shape as a business has been a high priority. Browett has focused on efficiency at head office but he thinks there is still plenty to do, particularly in the supply chain – an area in which he is well versed, having rebuilt Tesco’s in his time there.
“The systems and processes in this business are not what I’m used to,” he says. “There is a lot of work to be done and while centralised distribution has been a good thing, that’s only one part of it and we need to put the processes and systems in place to exploit it.”

Electricals has been one of the sectors that has been in the eye of the storm as far as the internet is concerned. But despite being best known as a leading light in the development of Tesco’s online operations, Browett is measured about the impact the internet will have on DSGi’s store operations, believing that customers investing in major electricals purchases will want to see and touch products. “The internet is not going to take over electrical retailing,” he says, claiming it’s much harder to show the differences between products online than physically in a store.
So investing in the shops and getting them all to the standard of the Birmingham megastore will be critical. Browett says he is engaged in a healthy debate with his finance director over how quickly the new Currys megastores will be rolled out but is keen to get a second up and running in the London area. In the meantime he has updated seven traditional Currys stores and four of the high street Currys.digital shops with the new look, as well as refurbishing 40 PC World stores. And while the Birmingham Currys megastore sits comfortably opposite a PC World branch, dual-branded Currys and PC World stores are also on the agenda in the new year.

The new store format is strikingly different from what has gone before and takes the Currys brand to a whole new level. But Browett knows only too well that this standard of retailing can only be sustained with a step change in the culture of service, which is why the changes are also supposed to be symbolic.

Referring to the change in the colour of the Currys logo – which has gone from the familiar red to primarily blue – he says: “In a psychological sense, we’ve gone from the red corner to the blue corner.” It’s going to be a long battle ahead, but the pugnacious Browett certainly has the stomach for a fight.