Analysis: How Currys plans to seize market share opportunity from cost-of-living crisis

After a year in which electricals giant Currys increased pre-tax profits fourfold, trading conditions are getting tougher. 

In the new financial year, profits are likely to be lower, not just because of a challenging environment but because Currys will continue investing in its customer proposition – with the objective of taking further market share.

Currys chief executive Alex Baldock says: “These are strong results from a stronger business that can do more to help the consumer through this cost-of-living crisis – and we intend to do exactly that. 

“We’re not counting on our environment getting any friendlier. How are we dealing with it? We’re leaning into it.”

Market share first

Currys, which is already the biggest player in its category and claims 26% of the UK electricals market, is making market share growth its top priority. 

In uncertain times, some retailers focus on preserving profitability, while others regard market share strength as the most important indicator of health and a firm foundation for future growth. Currys added 90bps of share last year, though it is down by the same amount compared with two years ago, largely as a result of the market shift to online.

The overall electricals market is “bigger and sustainably larger” than before the pandemic, points out Baldock, who says Currys’ products and services are becoming ever-more essential to customers.

He adds: “You can take two approaches in a cost-of-living crisis like this. You can hunker down or you can use this as an opportunity. We gained market share last year and we’re going to keep doing the things that enabled us to do that. 

“We see an opportunity to come out of a really tough year cemented in our customers’ affections, with more customers spending more with us and greater market share being the product of that.”

“You can take two approaches in a cost-of-living crisis like this. You can hunker down or you can use this as an opportunity”

Alex Baldock, Curry’s

Retail fundamentals

Winning share will come from focusing on “retail fundamentals” such as service, range, value for money and availability, Baldock insists, along with Currys’ omnichannel model.

While there will be some price rises, Currys aims to maintain its position on value and has launched initiatives including the 2021 Price Lock – freezing the price on “dozens” of products at last year’s level; a Go Greener range that will help shoppers save money on energy use; and more ways of spreading the cost of purchases such as a 12-month pay delay on any items costing more than £99.

Baldock says: “We’ve already got an unbeatable price promise – ‘you won’t get it cheaper, full stop’. We’ve invested to be able to stand behind that, investing in really good product at the end of the last financial year. We’ve locked in good product at good prices.”

While some disputes between suppliers and retailers – such as Tesco’s high-profile spats with Heinz and Mars – have hit the headlines, Baldock says Currys maintains a good relationship with suppliers, helping it keep prices low and availability high.

He says: “Inflationary pressure hits everybody and there are some lively conversations [with suppliers] as you’d expect. This is where we benefit by being the biggest in the market. That makes us the most important partner for our suppliers; we have a common interest and work hard to control inflationary pressures as best we can.”

Keeping a lid on costs

Baldock explains that Currys can only provide the best product and service for its customers by operating a tight ship on costs.

Although he is “happy to be paying” staff more – 29% more than five years ago – other costs are being kept down.

The retailer aims to save a cumulative £300m of costs over three years in the UK and Ireland. In year one, it achieved savings of £69m, “which was slightly ahead of our plans”, Baldock says. 

Currys clocked up £12m of savings in its supply chain through improvements and “more efficient processes”; £30m in IT; and a range of other programmes, such as reducing spending on goods not for resale, including facilities management and marketing, delivered £19m. In-store changes to the operating model shaved a further £8m from the cost base.

Baldock says: “We’ve been very attentive to our costs, as we need to be if we’re going to be as helpful to the consumer as we intend to be. Discipline on our side is allowing us to step up our help to the consumer.”

Sticky customers

Customers who make return visits to Currys are good for sales and market share, and the retailer believes its increasing range of services – whether technical support or credit provision – service standards and omnichannel model are powerful weapons in its armoury.

Baldock explains: “We have services that keep the customers coming back, services that help them afford the expensive technology that we provide and that help them enjoy it to the full.

“As the cost of living rises, we expect the role of stores to become more important as customers will want to make more considered shopping journeys for essential purchases.”

Last year, the number of Currys UK customers making purchases on credit rose 22% to 1.7 million. Total sales made on credit were 21% higher as the service was adopted by new and established customers. 

The reality of a higher cost of living will hit consumers more as the year goes on, but Baldock is convinced that Currys can ultimately be a beneficiary rather than a casualty.

• Don’t miss the best of the week – sign up to receive the Editor’s Choice every Friday