With huge numbers of nationwide store reformats, the opening of new unprecedented large megastores and the launch of its largest ever ad campaign, you have to agree DSGi is tackling whatever problems it has with brute force.
Andrew Wooden talks to category director for DSGi Jeremy Fennal, marketing director for PC World Niall O'Keeffe and DSGi spokesperson Mark Webb about the firm's recent activity and the future of the market...
At the time of going to press, DSGi's financial results hadn't yet been issued. However taking into account the information over its recent Right Issue and other announcements, many analysts were predicting a less than favourable set of figures.
However this shouldn't overshadow the positive moves the firm has made in recent times. Over 60 stores across the country have been reformatted in the new improved style and more are to follow, bolstered by the largest single advertising campaign the firm has ever put out. New Currys megastores will also send a clear message to the yet-to-emerge Best Buy – DSGi is the as-yet unchallenged incumbent and it can do big box stores just as well as any American contender. Whatever the wider financial landscape, the firm has put two fingers up to those who dismissed its Renewal and Transformation drive as pure rhetoric.
The new Currys opened in New Malden is the biggest store in your south east portfolio. What are the benefits of larger megastores over numerous smaller sites?
Mark Webb: It is not just the largest store in our portfolio, this is the biggest store of its kind in the south east.
The megastore concept underpins all the elements of our Renewal and Transformation in offering an unbeatable combination of value, choice and service for customers. But the scale of all our megastores going forward means that we can represent the entire electrical market in one location, with all the convenience, not to mention the wow factor, that comes with it. You'll therefore see range extensions in all our major categories, you'll see us including new ranges such as premium branded coffee machines, CDs and DVDs, plus an extremely impressive hi-fi area to appeal to a broad range of customers and budgets.
The impact of the store is profound, with our megastore near Birmingham, for example (which opened last year), very much established as a 'destination store' with customers happy to drive up to 90 minutes to get there.
And is this the way forward for electronics retail?
MW: It forms a key part of our multi channel approach, but as market-leading retailers we have developed a number of formats, all of which have seen impressive returns and all of which will see further rollouts in the coming year.
How many more store openings can we expect over the next year or so, across all your brands?
MW:We recently announced an accelerated rollout of our new store formats. 63 stores were reformatted last year, and some 140-150 will be completed this year in the UK and the Nordics (and a further 210-215 for FY2010/11).
It is important to note that alongside our store reformatting process, our focus on training staff in FIVES, the new customers service sales model, continues with over 20,000 colleagues already trained with an ongoing focus on product knowledge and expertise.
You've recently spoken of the importance of differentiating netbooks and notebooks. Do you think there is a problem with the public perception of sub-£300 machines and what they can do?
Jeremy Fennel: Yes. When netbooks were introduced last year, many people thought they were going to be a cheap and cheerful replacement for the laptop, but we have always positioned them as an additional mobile device – compatible with laptops and PCs.
Netbooks are mainly used for web surfing, email and viewing on the move. It's essentially 'netbooks are for viewing, notebooks are for doing'.
More than ever, customers are interested in getting value for money, but simply buying the cheapest model around does not provide them with all that they want from their netbook. Customers want a decent, usable screen size and keyboard, and a software system they are familiar with. Our biggest selling models retail at around £300.
PCs, and especially netbooks, are now sold by a much wider variety of retailers, such as mobile phone operators and supermarkets. Since these firms and their staff are rarely experts in the technology, how do you think this affects the public perception of netbooks, and the wider technology sector?
JF: We pride ourselves on offering customers good advice and excellent services to enable them to buy the right product to suit their individual needs and level of technical understanding, with confidence. They do not get this if they buy from non-specialist retailers and can often be disappointed with their choices.
Poor service and advice in non-specialists leads to high levels of disappointment and customer returns as they find they have not bought the right product for them. Also, as a market-leading specialist we offer an end-to-end service – from help and advice with original purchases to repairs and maintenance services.
You've sold off the Electro World operations in Hungary; will any other stores/regions be closed?
MW:At the same time as we announced the sale of our Hungarian operation, we confirmed that the Czech Republic and Slovakia operations (which had been under strategic review), were to be retained within the group. Only Poland remains under Strategic Review.
How would you say the Renewal and Transformation plan is going and how much is left to do?
MW: This has been an intense period of activity and the Renewal and Transformation Plan is progressing extremely well, with customer satisfaction rising, impressive returns from reformatted stores and a number of new innovations for the customer such as next-day delivery and timed delivery slots. There is a still lot more to do and plenty more potential we have identified in what is essentially a three-year plan.
Would you say PC and technology retail has fared better than some other sectors during the economic downturn?
MW:It has been a challenging time to sell discretionary, big ticket items. As we went into the downturn with a strategy in place though, we have been able to focus our efforts on delivering for the customer and developing our Renewal and Transformation plan. We are well placed to emerge stronger from the downturn with a compelling offering for customers that our competitors can't match.
Will 2010 be better or worse?
MW: As a business we remain cautious, with management currently assuming negative like-for-like growth until second half of 2010/11. Customers, however, will continue to see the benefits of our Renewal and Transformation Plan and our focus on offering an unbeatable combination of Value, Choice and Service.
The 'Whatever your world, PC World' ad is your biggest single campaign to date. What are the key ideas it attempts to get across, what do you hope to achieve with it and how significant is this for PC World?
Niall O'Keeffe:The campaign is about taking people's individual passions, and explaining how we can help them indulge them. So we moved on from telling about speeds and feeds to talking about passions.
The campaign itself has got four main objectives. One is to force customers to reappraise PC World. Two is to communicate our brand values of being enthusiastic, honest, dynamic and friendly. The other is to say that the computer is at the heart of most of our lives now, they are crucially important to us living our lives. The backbone of the campaign was to humanise this technology and make it appeal to everyone.
Before the campaign came though we wanted to get our house in order. We've relaunched about 60 stores now out of our whole portfolio. There's a completely new store layout. There's a much deeper range as well, and the demonstration zones give you an experience of the technology. When you go into a PC World it's a different experience than going into a multiple grocer and picking a box off the shelf – and ultimately that's our USP.
How will this evolve over the rest of the year?
NO'K:We expect to have another burst this year, and then to run another two to three of these a year going forward. What we're really confident about is that because this campaign is rooted in people passions, we can continue to evolve this. The initial pitch had nine executions, so we feel its something that has a lot of longevity.
How much have the transformation plans and the ad campaigns got to do with Best Buy turning up next year?
NO'K:Nothing. I was brought into the company in the middle of 2007 to build the PC World brand. This campaign was presented in February 2008, and Best Buy wasn't really being talked about back then. This is about PC World building its brand, not about anybody else.
How much of a threat are they?
NO'K:We shall wait and see. Obviously as a business we are preparing plans for whenever they enter the market, and our plans are set to relaunch 60-100 PC World stores and all of the work we're doing with Currys and the launch of megastores, etc. So we're continuing our plan and I think we're going to make it a very hard market place for anybody to compete with us, be it Comet, be it Best Buy. We'll see what happens.