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Electrical Goods Retailing - Europe - February 2016

Electrical Goods Retailing - Europe - February 2016

“What had been a boom sector for ten years has been struggling with decline since the onset of recession, hit by weak demand and the growing maturity of the computer market. Retailers have had to come to terms with the growing strength of online retailers, notably Amazon, but are showing signs of beginning to fight back. It is becoming increasingly clear that online and in-store retailers complement each other, each has its own strengths, but store based retailers need to make the most of their advantages – display, service – while price matching the online players. Online players must major on breadth of range and convenience. We think that the seemingly inexorable rise of the online players is coming to an end and the two will learn how to co-exist.”

– Richard Perks, Director of Retail Research


EUROPE – OVERVIEW
TECHNICAL NOTES
Market sizes – consumer spending on electricals
Market sizes - Retail data
Leading retailers
Financial definitions
ABBREVIATIONS
VAT rates
Figure 1: VAT rates, 2012-2016
EXECUTIVE SUMMARY – EUROPE – THE MARKET
THE MARKET
Consumer spending
Figure 2: Europe: Electricals market by product, 2014
Figure 3: Europe: All consumer spending on electrical goods, 2010-14
Figure 4: Europe: Consumer spending on Household appliances, 2010-14
Figure 5: Europe: Consumer spending on Audio-visual, photographic and information processing
equipment, 2010-14
Figure 6: Europe: Consumer spending on Telephone and telefax equipment, 2010-14
Spend per capita
Figure 7: Europe: Spending on electrical goods per capita, 2014
Spending on electricals in 2015
RETAIL SALES DATA
IT and telecoms
Figure 8: Europe: IT and telecoms specialist retailers sales (excl Vat), 2011-15
Figure 9: Europe: IT and telecoms specialist retailers forecast sales (Excl Vat), 2016-20
Household electricals retailers
Figure 10: Europe: Household electricals retailers sales (Excl Vat), 2011-15
Figure 11: Europe: Household electricals retailers forecast sales (Excl Vat), 2016-20
All electricals specialist retailers sales
Figure 12: Europe: All electricals retailers, estimated sales, 2011-20
LEADING STORE-BASED SPECIALIST RETAILERS
Figure 13: Europe: Top 20 electricals retailers sales, 2011/12-2015/16
Figure 14: Europe: Leading electricals retailers, outlet numbers, 2011/12-2015/16
Figure 15: Europe: Leading electricals retailers, sales per outlet, 2013/14-2015/16
Market share
Figure 16: Europe: Leading retailers’ share of spending on electricals, 2015
EXECUTIVE SUMMARY – EUROPE – THE CONSUMER
Who bought electricals?
Figure 17: Europe: Proportion of internet users who bought electricals, by country, January 2016
Online vs In-store
Figure 18: Europe: Proportion of electricals buyers in-store vs online, January 2016
Retailers used
Figure 19: Europe: Most used electricals retailer and share of number of electricals buyers, January
2016
Figure 20: Top 5 electricals retailers in Europe by proportion of all electricals buyers, January 2016
Customer satisfaction
Figure 21: Europe: Percentage satisfied or very satisfied with retailer attributes by country, January
2016
Figure 22: Europe: Top three most recently used retailers, by country, January 2016
Figure 23: Europe: Satisfaction by country, relative to the attribute average, January 2016
WHAT WE THINK
France
Germany
Italy
Spain
UK
EXECUTIVE SUMMARY – EUROPE – INNOVATION AND LAUNCH ACTIVITY
Apple extends Personal Pickup service to Europe…
…Amazon launches Prime Now in Italy
Media-Saturn rolls out digital lifestyle stores…
…O2 opens a new kind of mobile phone store
John Lewis taking on Dixons Carphone
Capi’s enhanced airport electrical store
New chain of Italian corner shops specialising in repairs of smartphones and tablets
FRANCE
OVERVIEW
What you need to know
Areas covered in this report
EXECUTIVE SUMMARY
The market
Spending and inflation
Figure 24: France: Consumer spending on electrical items (annual % change in volumes, 2010 prices),
2010-14
Channels of distribution
Figure 25: France: Estimated distribution of spending on electrical/electronic goods, 2015
Sector size and forecast
Leading players
Key metrics
Market shares
Figure 26: France: Leading specialist electrical retailers: Shares of spending on electricals items, 2015
Online
The consumer
Where they shop
Figure 27: France: Where they bought electrical goods in the last 12 months, in-store versus
online/catalogue, January 2016
Levels of satisfaction
Figure 28: France: Levels of satisfaction with last electricals retailer purchased from, January 2016
What we think
ISSUES AND INSIGHTS
What does the Fnac/Darty deal mean?
The facts
The implications
How can store-based retailers respond to the rise of Amazon?
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Economy weak but spending picking up
Electricals market impacted by falling prices
Specialists dominate distribution, with the big players growing share
Hypermarkets losing non-food sales but online expanding fast
Specialist electricals retailers standing firm
Countering competition from online
SPENDING AND INFLATION
France’s economy a weak spot in the eurozone
Consumption and purchasing power regaining momentum
Electricals market buoyed by telecommunications
Figure 29: France: Consumer spending on electrical items (incl. VAT), 2010-15
Figure 30: France: Consumer spending on electrical items (annual % change in volumes, 2010 prices),
2010-14
Inflation
Figure 31: France: Consumer Prices, Annual % change, 2011-15
Figure 32: France: Consumer price inflation on electrical items, annual % change, July 2014-December
2015
Unit volumes
Figure 33: France: Main Electricals markets, spending (inc VAT) 2011-19
CHANNELS OF DISTRIBUTION
Specialists dominate
Grocers important, but in decline
Online taking market share
Department stores most significant in Paris
Figure 34: France: Estimated distribution of spending on electrical/electronic goods, 2015
SECTOR SIZE AND FORECAST
Specialists have proven resilient
Standing up to the threat from online players
Figure 35: France: Electricals retailers’ sales, excl VAT, 2010-15
Subdued growth on the horizon
Figure 36: France: Electricals retailers’ sales, Forecasts, excl VAT, 2016-20
Figure 37: France: Electricals retailers’ sales as % of all spending on electricals, 2010-15
LEADING PLAYERS – WHAT YOU NEED TO KNOW
A mature market, with consolidation on the cards
Darty the market leader
Top groups growing combined share
French online market at a medium stage of development
Amazon leads, but Fnac, Darty and Boulanger all big online
LEADING PLAYERS
The triumvirate of Darty/Boulanger/Fnac
The Darty/Fnac merger
Integrating online, with marketplaces a key driver
Expanding physical stores too
Furniture/electricals combo retailers also strong
Independents in decline
Figure 38: France: Leading specialist electrical retailers: sales, 2012-15
Figure 39: France: Leading specialist electrical retailers: Outlet numbers, 2012-15
Sales per outlet
Figure 40: France: Leading specialist electrical retailers: sales per outlet, 2012-15
MARKET SHARES
Fnac has larger sales but Darty is leader in electricals
Top groups growing combined share
Conforama and BUT also important
Figure 41: France: Leading specialist electrical retailers: shares of spending on electricals items, 2012-
15
ONLINE
France at a medium stage of development
Online activity
Figure 42: France: Online buyers of electrical items in last three months, 2011-15
Online sales
Leading online players
Figure 43: France: Top retail sites by number of unique visitors, October-November 2015
Figure 44: France: Estimated sales of electricals online by leading retailers, 2014
THE CONSUMER – WHAT YOU NEED TO KNOW
Men and younger age groups most likely to buy
Specialists most popular, but online catching up
Amazon and Darty lead the market
Consumers are satisfied with product-related issues
But less satisfied with services
THE CONSUMER – WHO IS BUYING?
More men than women
Figure 45: France: Purchasing of electrical goods in the last 12 months, by gender, January 2016
More younger people than older
Figure 46: France: Purchasing of electrical goods in the last 12 months, by age, January 2016
THE CONSUMER – WHERE THEY SHOP FOR ELECTRICAL GOODS
Specialists popular but online now ahead of the grocers
Amazon and Darty now level-pegging overall
Figure 47: France: Where they bought electrical goods in-store or online in the last 12 months, January
2016
Amazon dominant online
Figure 48: France: Where they bought electrical goods in the last 12 months, in-store versus
online/catalogue, January 2016
Average age and affluence
Figure 49: France: Where they bought electrical goods, by age and income, January 2016
THE CONSUMER – LEVELS OF SATISFACTION
Satisfaction higher on product than service related aspects
Figure 50: France: Levels of satisfaction with last electricals retailer purchased from, January 2016
Satisfaction with specific retailers
Darty
Figure 51: France: Those agreeing they were satisfied at Darty relative to electrical retailer average,
January 2016
Fnac
Figure 52: France: Those agreeing they were satisfied at Fnac relative to electrical retailer average,
January 2016
Amazon
Figure 53: France: Those agreeing they were satisfied at Amazon relative to electrical retailer average,
January 2016
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Data sources
GERMANY
OVERVIEW
What you need to know
Areas covered in this report
EXECUTIVE SUMMARY
The market
Spending and inflation
Figure 54: Germany: Annual % change in total household expenditure and expenditure on electrical
goods, 2011-15
Figure 55: Germany: Consumer prices, annual % change, 2011-15
Channels of distribution
Figure 56: Germany: Estimated distribution of spending on electrical goods, 2015
Sector size and forecast
Figure 57: Germany: Annual % change in all retail sales (excl fuel) and electrical specialists sales,
2010-15
Leading players
Key metrics
Market shares
Figure 58: Germany: Leading specialist electrical goods retailers, % share of total spending on
electricals, 2014-15
Online
The consumer
Where they shop
Figure 59: Germany: Where they bought electrical goods in the last 12 months, in-store versus
online/catalogue, January 2016
Levels of satisfaction
Figure 60: Germany: Levels of satisfaction with last electricals retailer purchased from, January 2016
What we think
ISSUES AND INSIGHTS
Closing the loop on the customer journey
The facts
The implications
Amazon is raising the bar for customer expectations
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Consumer spending up but electricals not keeping pace
Audio-Visual spending down
Inflation at its lowest level since 2009
Channels of distribution
Sector size and forecast
SPENDING AND INFLATION
Consumer spending drives economic growth
Spending on electricals not keeping up
Figure 61: Germany: Consumer spending on electrical items (Incl. VAT), 2010-15
Inflation
Figure 62: Germany: Consumer prices, annual % change, 2011-15
Figure 63: Germany: Consumer price inflation on electrical items, annual % change, July 2014-Dec
2015
Unit volumes
Figure 64: Germany: Main electricals market, unit volumes, 2011-19
CHANNELS OF DISTRIBUTION
Online pureplays continue to grow
Figure 65: Germany: Estimated distribution of spending on electrical goods, 2013-15
SECTOR SIZE AND FORECAST
Specialists catching up with non-specialists
Figure 66: Germany: Electricals retailers sales, excl. VAT, 2010-15
Figure 67: Germany: Electricals retailers sales, Forecasts, excl. VAT, 2015-20
Figure 68: Germany: Electrical specialists’ sales as a share of total spending on electricals, 2010-15
LEADING PLAYERS – WHAT YOU NEED TO KNOW
Media Markt/Saturn continues to dominate
Buying groups maintain their popularity
Market shares
Online sales
Amazon dominates online
LEADING PLAYERS
Media Markt/Saturn is the dominant specialist
Buying groups remain popular
Telefonica’s acquisition of E-Plus increases its handset sales
Figure 69: Germany: Leading specialist electrical retailers sales, 2013-15
Figure 70: Germany: Leading electrical retailers, outlets, 2013-15
Sales per outlet
Figure 71: Germany: Leading electrical retailers: Estimated sales per outlet, 2013-15
MARKET SHARES
Media Markt/Saturn grows its market share
Figure 72: Germany: Leading electrical retailers, market shares, 2013-15
ONLINE
Online activity
Figure 73: France: Online buyers in last 12 months of electrical items, 2011-15
Online sales
Leading online players
Figure 74: Germany: Where they bought electrical goods online in the last 12 months, January 2016
THE CONSUMER – WHAT YOU NEED TO KNOW
Almost three-quarters bought from a specialist
Amazon and Media Markt dominate the sector
Specialists remain a long way behind online
Consumers are satisfied with prices and products
Less satisfied with service
Amazon customers are most satisfied
THE CONSUMER – WHO IS BUYING?
Men more likely to buy than women
Figure 75: Germany: Purchasing of electrical goods in the last 12 months, by gender, January 2016
A broad appeal but most popular amongst the young
Figure 76: Germany: Purchasing of electrical goods in the last 12 months, by age, January 2016
THE CONSUMER – WHERE THEY SHOP FOR ELECTRICAL GOODS
Media Markt/Saturn and Amazon dominate the sector
Grocery stores a long way behind
Figure 77: Germany: Where they bought electrical goods in the last 12 months, January 2016
Specialists remain a long way behind online
Figure 78: Germany: Where they bought electrical goods in the last 12 months, in-store versus
online/catalogue, January 2016
Customer profiles
Figure 79: Germany: Where they bought electrical goods, by age and income, January 2016
THE CONSUMER – LEVELS OF SATISFACTION
Consumers are happy with quality, price and range
More work to do on offering service
Figure 80: Germany: Levels of satisfaction with last electricals retailer purchased from, January 2016
Satisfaction with specific retailers
Media Markt/Saturn
Figure 81: Germany: Those agreeing they were satisfied at MediaMarkt/Saturn relative to electrical
retailer average, January 2016
Amazon
Figure 82: Germany: Those agreeing they were satisfied at Amazon relative to electrical retailer
average,
Specialist Retailers (excluding Media Markt/Saturn)
Figure 83: Germany: Those agreeing they were satisfied at any specialist retailer (excluding
MediaMarkt/Saturn relative to electrical retailer average, January 2016
Any non-specialist
Figure 84: Germany: Those agreeing they were satisfied at any non-specialist relative to electrical
retailer average, January 2016
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Data sources
ITALY
OVERVIEW
What you need to know
Areas covered in this report
EXECUTIVE SUMMARY
The market
Spending and inflation
Figure 85: Italy: Annual % change in total household expenditure and expenditure on electrical
products, 2010-15
Channels of distribution
Figure 86: Italy: Estimated distribution of spending on electrical products, 2015
Sector size and forecast
Figure 87: Italy: Annual % change in all retail sales (excl. fuel) and household goods retail sales, 2010-
16
Leading players
Key metrics
Market shares
Figure 88: Italy: Leading specialist electrical retailers: Estimated shares of spending on electricals
items, 2015
Online
The consumer
Where they shop for electrical products
Levels of satisfaction
What we think
ISSUES AND INSIGHTS
Specialists struggling to compete with Amazon
The facts
The implications
Pressure on retailers to deliver on product demonstration and technical expertise
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Consumer spend up for a second consecutive year
Category deflation eases, but still below the headline rate
Channels of distribution
Sector size and forecast
SPENDING AND INFLATION
Consumer spending
Figure 89: Italy: Consumer spending at current prices (incl. VAT), 2010-15
Inflation
Figure 90: Italy: Consumer prices, Annual % change, 2011-15
Figure 91: Italy: Harmonised indices of consumer prices: year-on-year % change, January 2014-
December 2015
Unit volumes
Figure 92: Italy: unit volume of selected major electrical goods categories, 2010-19
Figure 93: Italy: Definitions for unit volume market data
CHANNELS OF DISTRIBUTION
Figure 94: Italy: Estimated distribution of spending on electrical goods, 2014-15
Figure 95: Italy: Estimated distribution of spending on electricals goods, 2015
SECTOR SIZE AND FORECAST
Figure 96: Italy: Household goods retailers sales, exc. VAT, 2010-15
Figure 97: Italy: Household goods retailers sales, exc. VAT, 2015-20
LEADING PLAYERS – WHAT YOU NEED TO KNOW
A shifting market
Expert’s membership in flux
Specialists market share of total consumer spend on electricals declining
LEADING PLAYERS
Media World/Saturn store closures
Trony plans more store openings
Euronics focusing on technical specialisation
Possible UniEuro IPO in 2016
Figure 98: Italy: Leading specialists – sales, 2012-15
Figure 99: Italy: Leading specialists – outlet numbers, 2012-15
Figure 100: Italy: Leading specialists – Estimated sales per outlet, 2012-15
MARKET SHARES
Figure 101: Italy: Leading electrical specialists – estimated share of all spending on electrical goods,
2012-15
ONLINE
Market size
Online retailers
Figure 102: Italy: Where they bought electrical goods online in the last 12 months, January 2016
Online shoppers
Figure 103: Italy: Percentage of all individuals having purchased electrical goods online in the past 12
months, selected categories, 2009-15
THE CONSUMER – WHAT YOU NEED TO KNOW
84% of consumers purchase electrical goods from a specialist retailer
Amazon is the most popular retailer used for electrical goods purchasing
Service-related issues rank highest for dissatisfaction
Media World Saturn scores poorly on satisfaction
THE CONSUMER – WHERE THEY SHOP FOR ELECTRICAL GOODS
Specialists dominate
Figure 104: Italy: Where they bought electrical goods in the last 12 months, in-store or
online/catalogue, January 2016
Amazon enhances its market-leading online position with Prime Now
Figure 105: Italy: Where they bought electrical goods in the last 12 months, in-store versus
online/catalogue, January 2016
Average age and affluence
Figure 106: Italy: Where they bought electrical goods, by age and income, January 2016
THE CONSUMER – LEVELS OF SATISFACTION
Figure 107: Italy: Levels of satisfaction with last electricals retailer purchased from, January 2016
Satisfaction with specific retailers
Media World Saturn
Figure 108: Italy: Those agreeing they were satisfied at Media World Saturn relative to electrical retailer
average, January 2016
UniEuro
Figure 109: Italy: Those agreeing they were satisfied at UniEuro relative to electrical retailer average,
January 2016
Euronics
Figure 110: Italy: Those agreeing they were satisfied at Euronics relative to electrical retailer average,
January 2016
Amazon
Figure 111: Italy: Those agreeing they were satisfied at Amazon relative to electrical retailer average,
January 2016
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Data sources
SPAIN
OVERVIEW
What you need to know
Areas covered in this report
EXECUTIVE SUMMARY
The market
Spending and inflation
Figure 112: Spain: Harmonised indices of consumer prices: year-on-year % change, September 2014-
November 2015
Channels of distribution
Figure 113: Spain: Estimated distribution of spending on electricals goods, 2015
Sector size and forecast
Leading players
Key metrics
Market shares
Figure 114: Spain: Leading specialist electrical retailers: Estimated shares of spending on electricals
items, 2015
Online
The consumer
Where they shop
Figure 115: Spain: Where they bought electrical goods in the last 12 months, in-store versus
online/catalogue, January 2016
Levels of satisfaction
Figure 116: Spain: Levels of satisfaction with last electricals retailer purchased from, January 2016
What we think
ISSUES AND INSIGHTS
Who will win the omnichannel race?
The facts
The implications
Price and promotions – a changing marketplace
The facts
Implications
THE MARKET – WHAT YOU NEED TO KNOW
Market recovers
Deflation eases
Black Friday event grows
Channels of distribution
Sector size and forecast
SPENDING AND INFLATION
Consumer spending picks up in 2014
Figure 117: Spain: Consumer spending at current prices (incl. VAT), 2010-15
Inflation
Figure 118: Spain: Harmonised indices of consumer prices – annual % change, 2010-15
Figure 119: Spain: Harmonised indices of consumer prices: Annual % change, September 2014-
November 2015
Unit volumes
Figure 120: Spain: Unit volume of selected major electrical goods categories, 2010-19
Figure 121: Spain: Definitions for unit volume market data
CHANNELS OF DISTRIBUTION
Specialists dominate the sector
Figure 122: Spain: Estimated distribution of spending on electrical goods, 2014-15
Figure 123: Spain: Estimated distribution of spending on electricals goods, 2015
SECTOR SIZE AND FORECAST
Sector sales recover
Figure 124: Spain: Electrical specialists sales, 2010-15
Figure 125: Spain: Electrical specialists sales, 2015-20
Figure 126: Spain: Electrical specialists sales as share of total spending on electricals, 2010-15
LEADING PLAYERS – WHAT YOU NEED TO KNOW
Media Markt stands out
Leading chains focus on omnichannel
Market shares
Online electricals spending
Amazon leads in the online sector
LEADING PLAYERS
Media Markt growth accelerates in 2015
Worten – driving omnichannel and a new store concept
Click & mag drives Fnac omnichannel sales
Figure 127: Spain: Leading specialists – sales, 2012-15
Figure 128: Spain: Leading specialists – outlet numbers, 2012-15
Figure 129: Spain: Leading specialists – sales per outlet, 2012-15
MARKET SHARES
Figure 130: Spain: Leading electrical specialists – estimated share of all spending on electrical goods,
2012-15
ONLINE
Market size
Online retailers
Figure 131: Spain: Where they bought electrical goods online in the last 12 months, January 2016
Online shoppers
Figure 132: Spain: Percentage of all individuals having purchased electrical goods online in the past 12
months, selected categories, 2009-15
THE CONSUMER – WHAT YOU NEED TO KNOW
Shopping across channels
Amazon dominates the online sector
Consumers are satisfied with product-related issues
But less satisfied with services
Most satisfied with Amazon and El Corte Inglés
THE CONSUMER – WHERE THEY SHOP FOR ELECTRICAL GOODS
Non-specialists not far behind specialists
Figure 133: Spain: Where they bought electrical goods in the last 12 months, in-store or
online/catalogue, January 2016
Amazon dominates the online sector
Figure 134: Spain: Where they bought electrical goods in the last 12 months, in-store versus
online/catalogue, January 2016
Average age and affluence
Figure 135: Spain: Where they bought electrical goods, by age and income, January 2016
Figure 136: Spain: Selected retailers and channels where they bought electrical goods, by age,
January 2016
Figure 137: Spain: Selected retailers where they bought electrical goods, by income, January 2016
THE CONSUMER – LEVELS OF SATISFACTION
Differences in satisfaction levels
Figure 138: Spain: Levels of satisfaction with last electricals retailer purchased from, January 2016
Ease of returns ranks higher
Figure 139: Spain: More detailed levels of satisfaction with last electricals retailer purchased from,
January 2016
Figure 140: Spain: Ranking of satisfaction levels with last electricals retailer purchased from, January
2016
Satisfaction with specific retailers
Media Markt
Figure 141: Spain: Those agreeing they were satisfied at Media markt relative to electrical retailer
average, January 2016
El Corte Inglés
Figure 142: Spain: Those agreeing they were satisfied with El Corte Inglés relative to electrical retailer
average, January 2016
Amazon
Figure 143: Spain: Those agreeing they were satisfied with Amazon relative to electrical retailer
average, January 2016
Any grocery store
Figure 144: Spain: Those agreeing they were satisfied with a grocery store relative to electrical retailer
average, January 2016
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Data sources
UK
OVERVIEW
What you need to know
Areas covered in this report
EXECUTIVE SUMMARY
The market
A decline in spending in 2015
Figure 145: Consumer spending on all electrical products: market size and forecast (including VAT),
2010-20
Specialist sector size
Figure 146: Annual percentage change in the value of sales through electrical goods specialists, 2010-
15
Online
Figure 147: Estimated percentage of all consumer spending on electrical goods coming through online
channels, 2011-15
Deflation
Figure 148: Consumer prices inflation, annual rate of change, 2010-15
Leading retailers
Market shares
Figure 149: Market shares of the leading specialist and non-specialist retailers of electrical goods, 2014
and 2015
Distribution of spending
Figure 150: Estimated distribution of spending on electrical goods, 2014 and 2015
The consumer
77% purchased some electrical goods in the past year
Figure 151: Types of electrical products purchased in the past 12 months, November 2015
And 58% plan to buy some goods in the next year
Figure 152: Planned purchase of electrical goods in the next 12 months, November 2015
Where they buy
Figure 153: Retailers used for electrical goods purchases in the past 12 months, either online or instore,
November 2015
Satisfaction with retailers
Figure 154: Overall net satisfaction with last electrical buying experience, by criteria, November 2015
Attitudes to electrical goods retailers
Figure 155: Attitudes towards electrical goods retailers, November 2015
Black Friday
Figure 156: Purchase of electrical goods on Black Friday 2015, in-store or online, December 2015
What we think
ISSUES AND INSIGHTS
The importance of stores in the decision making process
The facts
The implications
Sainsbury’s and Argos: what does it mean for the electricals market?
The facts
The implications
Getting service right
The facts
The implications
Black Friday: making sense of it all
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Consumer spending falls in 2015
A positive year for the specialists
Channels of distribution
Deflation remains a downward driver
Black Friday
MARKET DRIVERS
A good second half of the year for computer and telecoms specialists
Figure 157: Annual % change in the all retail sales, electrical household appliances and computers &
telecoms equipment, non-seasonally adjusted, Jan 2014-Dec 2015
Prices continue to fall
Figure 158: Consumer prices inflation, annual rate of change, 2010-15
A positive environment for consumers?
Figure 159: Annual percentage change in earnings versus consumer price index, January 2010-
December 2015
Consumer financial status
Figure 160: How consumers describe their current financial situation, February 2009-October 2015
Property market continues to show growth, but renting continues to climb
Figure 161: Annual Number of UK residential property transactions, non-seasonally adjusted, 2006-15
Figure 162: Percentage of individuals living in households by tenure, 2010-14
MARKET SIZE AND FORECAST
Spending falls in 2015 but expected to bounce back in 2016
Figure 163: Consumer spending on all electrical products: market size and forecast (including VAT),
2010-20
Figure 164: Electrical products: market size and forecast (including Vat), in current and constant prices,
2010-20
Figure 165: Annual consumer price inflation, by electrical category, 2015
Segment forecasts
Household appliances
Figure 166: Household appliances: segment size and forecast (including VAT), 2010-20
Computing and telecoms
Figure 167: Computing and telecoms goods: segment size and forecast (including VAT), 2010-20
Audio-visual and photographic goods
Figure 168: Audio-visual and photographic goods: segment size and forecasts (including VAT), 2010-
20
Personal care appliances
Figure 169: Personal care appliances: segment size and forecast (including VAT), 2010-20
Segment forecasts: annual data
Figure 170: Electrical goods segment forecasts (including Vat), 2010-20
Forecast methodology
SPECIALIST SECTOR SIZE
A good year for specialist retailers
Figure 171: Electrical goods specialists sales relative to all consumer spending on electrical goods (including VAT), 2010-16
Figure 172: Electrical goods specialist sector sales (excluding VAT), 2010-16
Stores: Back in fashion?
Figure 173: Share of all online sales by store-based and online-only retailers, by monthly share, 2009-
15
Enterprises and outlets
Figure 174: Number of retail outlets, 2011-15
Figure 175: Number or retail enterprises, 2011-15
CHANNELS OF DISTRIBUTION
Electrical goods specialists recording growth
Figure 176: Estimated distribution of spending on electrical goods, 2014 and 2015
THE CONSUMER – WHAT YOU NEED TO KNOW
77% bought electrical items in 2015…
…but only 58% plan to buy in 2016
Non-specialists the go-to for electricals
Consumers happy with products, less so service
Price matching - a differentiating factor but many don’t trust it
Over a third say they choose where to shop because of after-sales service
Stores still have a big part to play
Those who do buy on Black Friday, buy online
WHAT THEY BOUGHT
Mobile phones the most popular purchase
Figure 177: Types of electrical products purchased in the past 12 months, November 2015
New purchases edge up
Figure 178: Types of electrical products purchased in the past 12 months, November 2013, 2014 and
2015
Younger consumers more technology focused
Figure 179: Types of electrical products purchased in the past 12 months, by age, November 2015
Home-ownership: is it affecting appliance buying?
Figure 180: Purchasing of household appliances, by home-ownership status, November 2015
WHERE THEY BUY
Non-specialists the go-to for electrical goods
Figure 181: Retailers used for electrical goods purchases in the past 12 months, either online or instore,
November 2015
Shopper profiles
Figure 182: Retailers used for electrical goods purchases in the past 12 months in-store or online, by
income and age, November 2015
Trend data
Figure 183: Retailers used for electrical goods purchases in the past 12 months, either online or instore,
November 2015
Online versus in-store
Figure 184: Channels used to purchase electrical items in the past 12 months, November 2015
Amazon, unsurprisingly, the dominant player online
Figure 185: Retailers used for electrical goods purchases in the past 12 months, by online or in-store,
November 2015
Repertoire of retailers used
Figure 186: Repertoire of retailers used to purchase electrical goods in the past 12 months, November
2015
SATISFACTION WITH RETAILERS
Figure 187: Overall net satisfaction with last electrical buying experience, by criteria, November 2015
Key driver analysis
Figure 188: Key drivers of overall satisfaction with last retailer purchased from, November 2015
Figure 189: Overall satisfaction with last retailer purchased from – Key driver output, November 2015
How the retailers compare
Figure 190: Overall satisfaction with last retailer used, November 2015
How they perform on pricing, range and quality
Figure 191: Satisfaction with pricing, by retailer last used, November 2015
Figure 192: Satisfaction with product range, by retailer last used, November 2015
Figure 193: Satisfaction with stock availability, by retailer last used, November 2015
Figure 194: Satisfaction with the quality of goods, by retailer last used, November 2015
Service
Figure 195: Satisfaction with staff knowledge, by retailer last used, November 2015
Figure 196: Satisfaction with after-sales service, by retailer last used, November 2015
Delivery, returns and website use
Figure 197: Satisfaction with range of delivery options, by retailer last used, November 2015
Figure 198: Satisfaction with ease of website use, by retailer last used, November 2015
Figure 199: Satisfaction with the ease of returns, by retailer last used, November 2015
Methodology
WHAT THEY EXPECT TO BUY
Figure 200: Planned purchase of electrical goods in the next 12 months, November 2015
Planned purchases down
Figure 201: Planned purchase of electrical goods in the next 12 months, November 2014 and
November 2015
Virtual reality
Figure 202: Interest in the potential functions of virtual reality headsets, August 2015
ATTITUDES TOWARDS ELECTRICAL GOODS RETAILERS
Price matching schemes
Figure 203: Attitudes towards retailers’ price matching schemes, November 2015
Figure 204: Agreement attitudes toward retailers’ price matching schemes, by age, November 2015
Services
Figure 205: Attitudes towards services provided or could be provided by retailers, November 2015
Figure 206: Agreement towards Attitudes to after-sales services provided by retailers, by socioeconomic
group, November 2015
Researching and buying electrical goods
Figure 207: Attitudes towards researching and buying electrical goods, November 2015
Figure 208: Attitudes towards researching and buying electrical goods, by gender, November 2015
BLACK FRIDAY
Figure 209: Purchase of electrical goods on Black Friday 2015, in-store or online, December 2015
Figure 210: Purchase of electrical goods on Black Friday 2015, by age, December 2015
Reasons for buying on Black Friday
Figure 211: Reasons for buying electrical items on Black Friday 2015, December 2015
Figure 212: Reasons for not buying electrical items on Black Friday 2015, December 2015
KEY PLAYERS – WHAT YOU NEED TO KNOW
Argos ups the ante with same-day delivery
Dixons Carphone continues to perform well since merging
AO.com continues its strong growth
Amazon pulls ahead as the largest non-specialist
Grocers struggle with lower footfall to superstores
Online sales overtake store sales
Advertising spend falls
Amazon’s reputation for service puts it ahead of the competition
Currys PC World struggles with negative brand associations
INNOVATION AND LAUNCH ACTIVITY
Same-day store collection and same-day home delivery
Immersive electronics experiences
Bringing the in-store experience into customers’ homes
Gadget trade-in service
Personalised Christmas gift wishes campaign
SPACE ALLOCATION SUMMARY
Space allocation overview
Figure 213: Leading electricals retailers, summary space allocation, January 2016
Detailed space summary
Supermarket in-store electrical department comparisons
Smart and wearable technology
Figure 214: Leading electricals retailers, detailed space allocation estimates, January 2016
Figure 215: Leading electricals retailers, detailed space allocation estimates, January 2016
Electrical departments as a percentage of total supermarket floor space
Figure 216: Supermarkets: Electricals department as a percentage of total floor space, January 2016
RETAIL PRODUCT MIX
Estimates
Figure 217: Leading electricals retailers, summary space allocation, 2015
Figure 218: Leading electricals retailers, electricals space, 2013/14
Sales density
Figure 219: Electricals retailers sales densities by broad product area, 2014/15
Sales by broad product category
Figure 220: Electricals retailers, estimated sales, by product, 2014
Figure 221: Electricals retailers: Estimated market share by broad product area, 2014
LEADING ELECTRICAL SPECIALISTS – KEY METRICS
Dixons Carphone performing well since merging
AO.com continues its strong performance
O2 Telefonica retail sales remain skewed by accounting changes
Maplin improves its multichannel offer
Figure 222: Leading specialist retailers of electrical goods: total net revenues, 2010-14
Figure 223: Leading specialist retailers, compound annual growth rates in total net revenues, 2010-14
Outlets and sales per outlet
Figure 224: Leading specialist retailers of electrical goods, outlet numbers, 2010-14
Figure 225: Leading specialist electrical retailers: compound annual growth rate of store numbers,
2010-14
Figure 226: Leading specialist retailers of electrical goods: Annual sales per outlet, 2010-14
Figure 227: Leading specialist retailers of electronical goods, compound annual growth rate of annual
sales per outlet, 2010-14
Operating profits and margins
Figure 228: Leading specialist retailers of electrical goods operating profits, 2010-14
Figure 229: Leading specialist retailers of electrical goods, operating margins, 2010-14
Sales area and sales densities
Figure 230: Selected leading specialist retailers of electrical goods: Total sales area, 2010-14
Figure 231: Selected leading specialist retailers of electrical goods: annual sales per sq m, 2010-14
LEADING NON-SPECIALISTS – KEY METRICS
Amazon pulls ahead despite slower growth
John Lewis moves into mobile
Grocers struggle with lower footfall to superstores
Smaller non-specialists declining
Figure 232: Leading non-specialist retailers’ sales of electrical/electronic goods (excluding VAT), 2011-
15
Figure 233: Leading non-specialist retailers: Compound annual growth rates in electrical goods sales,
2011-15
Argos rolls out digital stores
John Lewis reaches Birmingham
Figure 234: Leading non-specialist retailers of electrical goods, store numbers, 2012-15
MARKET SHARES
Figure 235: Market shares of the leading specialist and non-specialist retailers of electrical goods, 2014
and 2015
ONLINE
Online overtakes store-based sales
Figure 236: Estimated online sales of electrical goods (including VAT), 2011-15
Figure 237: Leading online retailers’ estimated shares of online spending on electrical goods, 2015
Where people shop online
Figure 238: The Consumer: Where consumers shopped online for electrical goods in the past 12
months, November 2015
ADVERTISING AND MARKETING ACTIVITY
Total 2015 recorded above-the-line, online display and direct mail spend down 12.2%
Figure 239: Recorded above-the-line, online display and direct mail total advertising expenditure by UK
electrical retailers, 2011-15
Leading electrical retailers ad spend down 9.6%
Figure 240: Leading UK retail advertisers of electrical products: Recorded above-the-line, online display
and direct mail total advertising expenditure, 2011-15
TV attracts the most advertising spend
Figure 241: Leading UK retail advertisers of electrical products: Recorded above-the-line, online display
and direct mail total advertising expenditure, by media type, 2015
Nielsen Media Research coverage
BRAND RESEARCH
What you need to know
Brand map
Figure 242: Attitudes towards and usage of selected brands, November and December 2015
Key brand metrics
Figure 243: Key metrics for selected brands, November and December 2015
Brand attitudes: Argos and Currys PC World stand out for their widespread availability
Figure 244: Attitudes, by brand, November and December 2015
Brand personality: AO.com benefits from being engaging and accessible
Figure 245: Brand personality – Macro image, November 2015 and December 2015
John Lewis stands out for being authoritative and stylish
Figure 246: Brand personality – Micro image, November and December 2015
Brand analysis
Amazon stands out for its broad customer base
Figure 247: User profile of Amazon, December 2015
John Lewis’ sense of quality appeals to high earners
Figure 248: User profile of John Lewis, November 2015
Apple Store divides opinion but is particularly favoured by the young
Figure 249: User profile of Apple Store, December 2015
Argos performs well on availability and trust
Figure 250: User profile of Argos, December 2015
AO.com is growing its awareness by delivering a reliable and responsive experience
Figure 251: User profile of AO.com, December 2015
Currys PC World struggles to improve negative brand associations
Figure 252: User profile of Currys PC World, December 2015
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Data sources
Financial definitions
Sales per store, sales per square metre
Exchange rates
Consumer research methodology
The consumer – Key driver analysis
Figure 253: Overall satisfaction with last retailer purchased from – Key driver output, November 2015
Figure 254: Overall satisfaction with last retailer purchased from – Key driver output, November 2015
Mintel market size definitions
Forecast methodology
Specialist sector size
Abbreviations
AMAZON EUROPE
What we think
An evolving offer
Amazon Prime extends its breadth and reach
A sense of occasion
Product development continues
Delivery gets quicker, but pushes fulfilment costs higher
Click & Collect points limited to US universities
Looking ahead
Company background
Company performance
Growth slows in Europe
Figure 255: Amazon.com Inc: Group financial performance, 2010-15
Sales mix
Figure 256: Amazon: Composition of net sales, 2015
Retail offering
AO WORLD
What we think
Launching in the Netherlands…
…and possibly Austria
Collect+ deal widens delivery options
Enhanced website features
Expanding audio visual product offering
AO.de sales progressing satisfactorily, but requiring big investment
Company background
Company performance
Figure 257: AO World Plc: Group financial performance, 2011/12-2014/15
Retail offering
APPLE RETAIL
What we think
It’s all about the iPhone
The importance of innovation
Apple stores an important to success of the brand
Company background
Company performance
Worldwide
Figure 258: Apple Retail: sales and operating profit, 2011-15
Figure 259: Apple Retail: Outlet data, 2010/11-2016
Apple Retail UK
Figure 260: Apple Retail UK: Group financial performance, 2009/10-2014/15
Figure 261: Apple Retail UK: Outlet data, 2010/11-2016
Figure 262: Apple Retail: European stores, 2014-16
Retail offering
ARGOS
What we think
Possible Sainsbury’s takeover deal casts doubt on future of Argos’ high street stores
Market-leading store collection and delivery options
Unique over the counter gadget trade-in service
Live chat help results in increased purchase satisfaction and online conversion rates
New regional hub would boost same-day fulfilment capability
Company background
Company performance
First-half FY16
Trading statement for the 18 weeks to 2 January 2016
Figure 263: Argos: Group financial performance, 2010/11-2014/15
Figure 264: Argos: Outlet data, 2010/11-2014/15
Retail offering
BOULANGER/HTM GROUP
What we think
Targeting high population urban locations
Latest stores adapted to the digital age
Adapted well to online
Company background
Company performance
Figure 265: HTM (Boulanger): Group sales performance, estimated, 2011-15
Figure 266: HTM (Boulanger): Outlet data, 2011-15
Retail offering
CONRAD ELECTRONIC
What we think
New service concept
Meeting increased online and retail store demand
B2B push on back of small business reputation
Company background
Company performance
Figure 267: Conrad Electronic Germany: Group financial performance, 2010-15
Figure 268: Conrad Electronic: Outlet data, 2010-15
Retail offering
DARTY GROUP
What we think
Fnac takeover deal
Digital strategy
First-to-market edge over rivals
Marketplace widens product offering and enhances price perception
Rolling out bespoke fitted kitchens offer into more stores
Capitalising on consumer demand for connected technology
Customer services offer
New store card with upgraded credit offering and loyalty benefits
Company background
Company performance
Figure 269: Darty Group: Group financial performance, 2010/11-2014/15
Figure 270: Darty Group: Outlet data, 2010/11-2014/15
Retail offering
DIXONS CARPHONE
What we think
Connectivity
Making the most of the store base
Price matching
Where next
Company background
Figure 271: Dixons Carphone: Retail brands, by country, 2016
Company performance
Figure 272: Dixons Carphone, Like-for-like growth, 2014/15-2015/16
Figure 273: Dixons Carphone: Group financial performance, 2009/10-2013/14
Figure 274: Dixons Carphone: Group financial performance, 2013/14-2014/15
Figure 275: Dixons Carphone: Outlet data, 2009/10-2013/14
Figure 276: Dixons Carphone: Planned store closures, 2016
Figure 277: Dixons Carphone: Outlet data, 2013/14-2014/15
Figure 278: Dixons Carphone, Store portfolio, 2014-15
Retail offering
E-SQUARE
What we think
Weaknesses
Other businesses
Company background
E-Square
Electronic Partner
E-Square members
Figure 279: E-Square members, 2015
Company performance
Figure 280: E-Square: Estimated retail sales, 2011-15
Figure 281: E-Square: Members’ approximate store numbers, by country/region, 2011-15
Germany
Other Germany
Denmark
Finland
France
Greece
Italy
Portugal
Spain
UK
Ukraine
Kazakhstan
EURONICS INTERNATIONAL
What we think
Company background
Company performance
Figure 282: Euronics International: Group financial performance, 2010-14
Figure 283: Euronics International: Outlet data, 2010-14
Euronics membership
Figure 284: Euronics: Members, countries and trading names, 2016
EXPERT EUROPE
What we think
The up-sides
The downsides
Company background
Online
Figure 285: Expert International, online shopping availability, 2016
Company performance
Figure 286: Expert Europe: Estimated sales at retail, excl. VAT, 2011-15
Figure 287: Expert Europe: Outlet data, 2011-15
Expert Germany
Expert Italy
Expert Spain
Expert France
Retail offering
Store formats
FNAC
What we think
Darty deal
Fnac Kids roll-out completed
Aiming for market leadership in the fast-growing connected devices sector
Expanding its digital cultural offering
Enhanced marketplace offering puts it in direct competition with Amazon
Company background
Company performance
2015
Figure 288: Fnac: Group financial performance, 2010-15
Figure 289: Fnac: Outlet data, 2010-15
Retail offering
MAPLIN ELECTRONICS
What we think
Bolstering online support for non-store customers
Raising brand awareness of multichannel credentials and in-store advisory service
Full week of Black Friday sales
Retro trend for 80s gadgets
Company background
Company performance
Figure 290: Maplin Electronics Ltd: Group financial performance, 2010-2014/15
Figure 291: Maplin Electronics Ltd: Outlet data, 2010-2014/15
Retail offering
MEDIA-SATURN
What we think
Increasing the channels to market
Adding new store concepts
Market-leading delivery services
Encouraging innovation
Company background
Company performance
Figure 292: Media Markt/Saturn: Group financial performance, 2010/11-2014/15
Figure 293: Media Markt/Saturn: Outlet data, 2010/11-2014/15
Retail offering
EUROPEAN RESEARCH METHODOLOGY
Sample sizes by demographics and geographies
Our research partner – Lightspeed GMI

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