Dixons to scale back high street presence as part of multichannel strategy

Dixons Retail plans to reduce the number of its UK stores, especially on high streets, as it brings together online and store sales in a multichannel strategy.

The company, which had 557 stores in the UK as of April 28, said its analysis showed that as it brought together online and stores it would need 400 to 420 stores, of which around 40 would be on the high street and the rest large out-of-town stores.

Dixons Retail trades in the UK under the pureplay brands Dixons.co.uk and Pixmania.co.uk, and through multichannel brands Currys and PC World, and says it will work towards bringing its store and online formats together by developing its website further, introducing a pay&collect service and taking the internet into stores in order “to offer customers the full range of product regardless of their preferred location.”

Presenting its full-year results this week Dixons Retail said that driving “a successful and sustainable business model in a multichannel world” would be a key part of its future strategy. “The way in which a customer shops is fundamentally changing,” it said. “Our customers tell us they want advice, to experience products and to ensure they are making the right choices, particularly as these are often major purchases they will own for several years.”

Historically, it said, pureplay operators had lower costs and could offer more competitive prices than those with stores. But Dixons said it had “closed the price and cost gap dramatically” in recent years and would now focus on ways of improving its service. They include working with suppliers on ways of presenting their products to customers, selling ‘solutions’ for customer needs rather than products.

Dixons Retail reported a 30% rise in multichannel sales over the year to April 28, with UK and Ireland multichannel sales up by 48% in the second half alone. Underlying pre-tax profit for the year was at £70.8m, down from £85.3m at the same time last year. But bottom-line losses came in at £118.8m, down from £224.1m at the same time last year after writing down the value of its Greek, Italian and Pixmania businesses by a total of £196m.

Group sales were flat at £8.2bn, while in the UK and Ireland division total sales fell by two per cent to £3.8bn, with like-for-like sales down by four per cent.

“Against a tough economic backdrop, we have continued to deliver on a clear plan to transform the business,” said Sebastian James, chief executive. Today we are setting out our three strategic priorities to further improve our market position and build a business that is stronger, more profitable and sustainable.

“Our service-led business model, now underpinned by the launch of Knowhow, is increasingly valued and trusted by our customers and our suppliers. The new financial year has got off to a good start with the trends seen in the final quarter of last year broadly continuing. However, we continue to plan cautiously and manage costs aggressively. Our business is well-positioned for the year ahead.”