As three big names in the electricals sector post their full-year results, Retail Week takes a look at the themes driving success in a once floundering market.
The lights were dimmed in the electricals sector for a while as cost inflation and lower consumer spend caused sales and profits to slump. But the cost-of-living crisis is abating and consumer confidence is rising, both of which are causing shoppers to rethink their spending habits.
As the electricals market starts to look up, the chief executives of Currys, AO and Marks Electricals have all said recently that they are “confident” about further progress in the long term.
Retail Week looks at the trends helping the electricals market on its upward trajectory, from a renewed focus on providing quality services to leveraging AI.
AI: ‘The most exciting development since the tablet’
One retailer in particular is making big strides in technology in a bid to get product sales back on track.
“We expect AI-powered products, particularly computing and mobiles, to be the single most exciting new product innovation since the tablet in 2010,” Currys CEO Alex Baldock said. “We’re well placed with our partnerships, scale and channels to make the most of the opportunity.”
GlobalData analyst Oliver Maddison said Currys’ partnership with Microsoft has afforded the retailer exclusivity on many of the tech company’s AI-powered devices, “which is likely to support sales as consumers are more likely to make new purchases for revolutionary new features.”
Baldock added that the AI-powered Samsung Galaxy S24 mobile is one of the group’s bestsellers at the moment, and the most recent launch has been AI-powered PCs.
Consumer demand for exciting product innovations is growing, and Baldock predicts sales will really take off in 2025.
Meanwhile, AI is being more widely adopted across retail operations such as warehousing, supply chain and checkouts.
Marks Electrical chief executive Mark Smithson said the group uses AI in customer service and is considering further investment, but domestic appliance specialist AO chief executive John Roberts has a different view.
“I think it’ll be some time before you can download a washing machine or a fridge freezer,” Roberts joked.
“We also think it’s really important that we have human beings in the moments that matter to help people with a personal touch.”
Services over products for growing sales
Product sales were not the only reason for electricals’ retailers mostly positive results. Services, including installation, repairs, and subscriptions, were hailed as the revenue heroes contributing to growth.
Currys’ credit service grew 17% to reach 2.3 million customers, its repair customers totalled 12 million and ID mobile subscribers grew to 1.8 million.
The retail giant has been a leader in services and has championed it for a long time, while online-only retailers AO and Marks Electrical have also become more devoted to service provision over time.
Roberts said that offering finance accounts and benefits to its membership scheme is helping the retailer grow. “Customers pay £39.99 a year to get free delivery, free recycling and assorted member discounts on products,” he said.
While premium product sales have been taking a hit at Marks Electrical as a result of pressures on consumer spending power, Smithson said its “great business model” of prioritising installation has enabled growth.
“We’ve put in free installation of freestanding washing machines and dishwashers, and the cost-of-living crisis means there’s no better time to help the consumer and provide free added value offers.”
The same can be said for Currys, whose latest results show its installation services are becoming “ever more valued by customers” – 28% of its UK big box deliveries now include installation.
TV sales soar in summer of sport
Once every four years, the world is treated to a summer of sport in which the men’s Euros football tournament and the Olympics play a huge part. It’s the perfect time for customers to upgrade their TVs.
Electricals retailers often generate higher sales during these seasonal events, and this year has been no exception. Argos has predicted it will sell 180,000 TV’s during the Euros.
Baldock said: “Long may England and Denmark [Currys also has a Nordic business] stay in the Euros,” since large screen TVs are currently Currys’ fastest growing product category, up 50% year on year across all markets.
AO’s growth also accelerated, with Roberts pointing to April, May and June when TV sales rose 54% compared with the same period last year.
While TV sales growth will likely moderate once the sporting summer comes to an end, at the moment the benefits are being felt.
Winning customer satisfaction
In conversation, Baldock, Roberts and Smithson all made reference to their Trustpilot scores, demonstrating how important customer feedback is.
AO has over half a million reviews on Trustpilot, sharing a score of 4.8 with Marks Electricals, while Curry’s score has risen from 3.6 to 4.1 – Baldock says it has “overtaken John Lewis” (which scores 4.0).
Smithson believes more product categories and expansion into small domestic appliances have been the catalyst for new and returning customers to Marks Electrical.
“Once people have heard of us, they use our services, and they come and shop with us instead of the likes of John Lewis and Currys,” he maintained. “We’re still a relatively small business, so to speak, but we like to treat the consumer as if we are a very small business.”
The same ethos is echoed by Roberts, who said AO has transacted with 600,000 new customers this year.
“You’ve got to be brilliant at helping customers choose the right product, you’ve got to have it available, have the best price, deliver it immediately, deliver it with a smile, and if anything goes wrong, we need to help you with the human touch,” he said.
As the electricals market starts making a comeback, innovation and customer-focused services should bring back much-needed spark.
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