Dixons to ramp up marketing tie-ups with Apple and Microsoft to maintain growth

Dixons Retail will continue to improve its in-store and after sales service in order to maintain customers satisfaction levels and boost sales after revealing a five-fold increase in operating profits at its UK and Ireland business.

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The electronics retailer, which owns brands including Currys and PC World, posted operating profits at its core business of £31.4m in the six months to 31 October. Like-for-like sales were up 9 per cent year as it focuses on services to differentiate from online competitors.

Including its international operations, the group is reporting its first operating profit in 6 years. Like-for-like sales across the business were up 6 per cent.

Dixons says its focus on “great value”, as well as choice and service has helped it gain market share. The retailer also says it has benefitted from rivals, such as Comet, exiting the market, and says it remains cautious about the “outlook for consumers” in its markets.

Electronics sales have increasingly shifted online, but Dixons believes that its stores remain a key differentiator, offering customers the opportunity to get advice and to experience products before they buys them. It plans to improve the in-store experience by working with suppliers, particularly Microsoft, which CEO Sebastian James tells analysts on a call the firm is working with to “tell the Windows story more effectively”.

James says: “Our retail stores need to get better every year. We have to drive the store experience forward. Terms such as innovative, creative and forward-looking have not historically been associated with Dixons, we want them to be in the future.”

Dixons is also working with suppliers to develop exclusive advertising, becoming the first UK retailer to develop an ad with Apple. James says the ad is “quite different” to Dixon’s historical advertising and sees the retailers talking about product for the first time and beginning to introduce the notion of “Dixons as experts”.

Dixons is also planning a revamp of its website next year, which James admits is weaker than its online competitors’, plus a change to the way it thinks about its customers. James says that with better CRM and services such as its ‘know-how advisors’ it can improve customer satisfaction, drive more recurring revenue and build a more sustainable business.

Sales from the Knowhow business unit were up 13 per cent year on year to £19.6m. In the past 12 months, Dixons says it has carried out 2.6 million deliveries and installations, sold 1.1 million cloud services and carried out 750,000 TV, laptop and tablet repairs.

Analysts agree that it is Dixon’s focus on stores and service that is offsetting the threat of online retailers.

David Alexander, retail consultant at Conlumino, says: “In a sector that has increasingly been shifting its focus online, Dixons has shown an appreciation for the role of the store as a key differentiator.

“Customer service has been another key element in Dixon’s strategy to maximise the advantage of its multichannel credentials. With interactive displays and ‘know-how advisors’ on hand, it is setting high standards for customer engagement and the ability of its staff to upsell products has even convinced key suppliers to offer Dixons exclusive products.”

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