Has UK Dixons, Just Given JB Hi Fi An Insight Into Their Future
In what could be a model for JB Hi Fi after Amazon has moved into Australian market, UK retailer Dixon’s, has come out and said that they no longer see themselves as a “retailer” but more a “services” Company.
After reporting record profits Dixons CEO Sebastian James argued that the Company was now making half their profits from services.
JB Hi Fi who already has a commercial division and is well placed to deliver a host of new “services” for both consumers and B2B businesses and Government departments.
Currently Dixon’s consists of 1,708 Dixons, Carphone Warehouse, Curry’s and PC World shops, said that it had seen no signs of a slowdown in consumer spending as it reported a 10pc lift in pre-tax profits to $850M
James said that Dixons Carphone has ramped up its services business which includes everything from mobile phone repairs to instore KnowHow clinics concepts that analysts claim would be extremely easy for a JB Hi Fi to roll out as they are already expanding their mobile phone category.
Recently Best Buy in the USA reported increased profits with the Company crediting services and mobile communications as a key contributor to increased revenues.
James claims that the new lines of business would “make the company stronger, lower risk and more resilient”.
Dixons Carphone posted a 3pc rise in total sales, to $17.9bn while like-for-like sales rose by 4pc during the year to April 29.
Mr James said that the blurring of online retail and its network of shops which offered services meant that it was “structurally advantaged over pureplay retailers like Amazon”.
The electricals retail industry has undergone a huge shake-up as Amazon has undercut on price forcing traditional retailers to up their game by offering same day deliveries of fridges and freezers.
“We were one of the first to catch the Amazon virus, many died but we survived and now we are somewhat inoculated,” Mr James said about threat of the US online giant.
The Dixons Carphone boss said he thought it would be unlikely that Amazon would open bricks and mortar electricals shops following its audacious $10bn takeover of Whole Foods.
“If Amazon wants to compete with us in electricals and open stores, then it will have the same cost structure and rent bills as us and none of our scale, so I would be thrilled if they tried it,” Mr James said.
“Traditional retail is changing and it won’t just be about the products you sell … we are moving towards less transactional areas of business but we are at GCSE level and we should be at A-level and beyond”, the Dixons Carphone boss said when referring to the UK education system.
Dixons Carphone said that there had been no spending impact following Brexit and said that the sales of flat screen TVS, which it had previously dubbed as a barometer of the economy, were “fine”.
But the company did report a slight slowdown in mobile phone sales as more consumers held on to their handsets for longer as newer versions were considered incremental upgrades rather that game-changing.
Humphrey Singer, Dixons Carphone’s finance boss, explained that there was a difference between selling electricals and food or fashion as prices fall in the months leading up to a new version’s release while updated models tend to be more expensive than older models.
“As a result, it is harder for a consumer to know if they are paying more for a product as they might do with a banana,” he said.