In its most recent update, Marks Electrical reported a 24.8% increase in revenue, making it the UK’s fastest-growing electrical retailer. Firmly establishing itself as a challenger to larger competitors such as Currys and AO, what can others learn from its success?
Marks Electrical Group reported a 24.8% increase in revenue for the six months ending September 30, 2023, making it the UK’s fastest-growing electrical retailer.
Significant growth was achieved in categories such as televisions (up 71%), washer-dryers (up 74%) and American fridge-freezers (up 36%) compared with the previous year.
Established in Leicester in 1987, Marks Electricals is generating robust aisles growth and building on its accelerated expansion during the pandemic.
Its year-on-year growth rate peaked at 77.8% in 2020/21, followed by a 43.8% increase to £80.5m in 2021/22, with a further rise to £97.8m in 2022/23.
In November 2021, Marks Electrical floated on London’s AIM market, raising £30m to support its expansion.
Firmly establishing itself as a challenger brand to larger competitors such as Currys and AO, what can others learn from its success?
1. Technology is key to the business
Marks Electrical has made significant investments in proprietary technology, which plays a pivotal role in its daily operations. The company leverages a combination of in-house and outsourced solutions.
Its dedicated in-house IT team has implemented and customised a range of tailored software. This includes:
• Marks Electrical’s transactional website, launched in 2003, which currently operates on Amazon Web Services, utilising dynamic server scaling for seamless capacity expansion.
• The retailer’s pricing tool is developed in-house, providing real-time pricing and stock information while tracking market prices for individual SKUs. It uses algorithms to continuously adjust prices, taking into account factors such as competitor pricing, availability, stock levels and profit margins.
• The Picklist is a system that monitors stock picking, loading and delivery tracking. It is fully integrated with third-party services, including MaxOptra for delivery status, route planning and route optimisation, and Mzone for live fleet management and GPS tracking.
• The group’s enterprise resource planning (ERP) tool was originally implemented with off-the-shelf software from Everest in 2006.
ERP has been customised over the years and now encompasses purchasing, inventory management, sales and accounting functions, as well as automating the processing of vendor price lists, product specifications and invoices.
Such technologies are widely adopted by other retailers and Marks Electrical is effectively customising them to meet the business’ specific requirements.
2. Centralised operational strategy
Marks Electrical relocated to its current multipurpose site in Leicester in 2017. Since then, it has served as the retailer’s public showroom, head office, warehouse and distribution centre, effectively centralising the company’s operations.
This eliminates the need for additional facilities, reduces overhead costs, simplifies operations, saves time and ensures collaboration between different departments.
As an online pure player, the centralised operational strategy provides better control over the customer experience, from order placement to delivery, creating a frictionless online shopping experience.
In FY2022, a new revenue stream was created with the hiring of an in-house installation team of experienced engineers. This enabled the business to internally manage the installation of appliances, which had previously been outsourced.
3. Vertically integrated delivery model
According to the retailer, 93% of its orders were delivered by its own fleet of over 40 delivery vehicles.
Marks Electrical’s headquarters features an on-site fuelling station and full-time mechanic, ensuring that vehicles can be refuelled and repaired overnight to maximise efficiency and minimise downtime.
Similar to other retailers with their own fleet of delivery vehicles, this straightforward and efficient vertically-integrated delivery model operates seven days a week, offering the retailer flexibility and agility.
In FY2022, Marks Electrical expanded its fleet with an additional 10 vehicles. It also implemented a third shift at its warehouse, allowing the site to operate 24/7 and optimising the ability to process, pick and load throughout the day. In the same year, the online retailer refreshed its fleet with a new look.
4. Strong focus on core business and additional revenue streams
Marks Electrical sells, delivers, installs and recycles a wide range of household electrical appliances, including cookers, refrigerators, washers and dryers, dishwashers, audiovisual (AV) equipment, small appliances, add-on services, microwaves, vacuum cleaners, and sinks and taps.
The group has its sights set on the large and growing major domestic appliances (MDA) market and consumer electronics (CE) market in the UK, estimated to be worth approximately £7bn.
According to the retailer, it is expanding its product offerings into new categories, including AV products, air-conditioning, boiling water taps and gaming products.
The AV product category represented 5% of the group’s sales in FY2021, and the company sees strong potential for further growth in the coming years.
Incentivised by the establishment of an in-house installation team in FY2022, and its new revenue stream, the retailer is considering bringing warranty sales in-house through a captive warranty service offering. Currently, this is outsourced to a third party.
5. Investment in marketing to enhance brand awareness
Marks Electrical has significantly increased its advertising budget in recent years. In FY2022, it allocated 5% of its revenue to marketing, a level of spending that is expected to continue in FY2023.
In contrast, in FY2021, marketing spending accounted for only 2.9% of total revenue.
In June 2021, the retailer signed a contract with a marketing agency to assist and optimise its pay-per-click, search engine optimisation and conversion rate optimisation.
In August 2021, Marks Electrical identified low brand awareness through a YouGov poll – the online electrical retailer was known to only 6% of England’s population.
As a result, in 2021-2022, the retailer aired several media advertising campaigns, including its first nationwide TV.
In 2022, it launched a large-scale out-of-home marketing campaign, featuring ads on London buses, London Underground, the Transport for London network, motorway service stations, major airports and train stations.
In the same year the retailer introduced MRK1, its company mascot, which is utilised across various media channels, with plans to further enhance its prominence in the years ahead.
The brand awareness survey was updated in FY2022, revealing that 15% of the population in England had heard of Marks Electrical. This marked a 9 perentage-point increase on the August 2021 result.
It is evident that the increased digital spending has not only enhanced Marks Electrical’s brand image and awareness, but also boosted sales and expanded its potential customer base.
As the brand continues its ambitious growth strategy to challenge larger competitors, we anticipate significant room for growth for the electricals specialist. Prospect forecasts its sales will exceed £160m by FY2027.
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