Currys’ goal to create “customers for life” by shifting its marketing focus to brand and services over product is paying off, according to chief executive Alex Baldock.
The retailer has invested heavily in highlighting the expertise of its employees over the past two years, with its first brand-led campaign, ‘Beyond Techspectations’, focusing on the long-term value it offers to consumers through aftercare and credit.
That, the company says, has led to a significant uptick in the number of consumers who use its services over longer periods rather than simply buying products on a one-off basis.
“Our strategy is delivering a consistently improving customer proposition. As consumer confidence improves, we’ll be well placed to build on these strong foundations, to benefit shareholders as well as colleagues and customers,” Baldock said on a call with investors this morning (18 January).
The shift to brand-led activity is particularly important for the business to improve the lifetime value of customers, Currys’ head of brand and advertising Aisling Lancaster told Marketing Week in November.
“It’s a very slow purchase cycle. So we need to keep those customers sticky. And one of the ways we do that is reminding them through brand advertising,” she said.
That was borne out in the peak trading update released today for the 10 weeks to 6 January: the company says that in the UK sales of big-ticket items including computers and televisions remained muted while its services – like its iD mobile package and ‘care and repair’ options – grew more strongly.
Its credit extension service performed particularly well: the company saw record credit adoption of 20.6%, up 2.4% year on year for the same 10-week period, equating to 2.2 million active credit customers.
Baldock said: “In the UK and Ireland, we’ve kept up our encouraging momentum, in particular selling more of the services that boost margins and build customers for life.”
He attributed that growth in services to the marketing campaign which continues to bring consumers in-store, where services can be more easily sold, and increased consumer confidence in those services as a result.
Last year Baldock said Currys was “being bolder” about passing on inflationary costs to its customers, as its long-term investment in improving customer satisfaction bore fruit: “We’re able to monetise all these customer experiences; [they’re happier] so we can charge more for it.”
Additionally, in July 2023 the company said it would be “less and less” tolerant of any activity that wasn’t profitable, whether that be discounting or product categories, specifically citing an improvement in the brand’s pay-per-click marketing efficiency as an example of moving towards end-to-end profitable activities.
That was reflected in the peak trading update, which notes that profits were up as a result of a crackdown on costs and focus on profitable activities.
Baldock noted that even with that transition to longer relationships with consumers discretionary spending remains depressed. That tracks with GfK’s consumer confidence barometer, which suggests consumers are less likely to make big purchases. Like-for-like sales for both the first half of the brand’s financial year and for the peak trading period were down 3% on the same period the year prior.
Despite that the retailer delivered “robust profits” for the period, and issued guidance that its pre-tax profit for the full year is expected to be in the range of £105m to 115m.
Baldock said: “Our markets may be no easier, but we now expect full-year profits to be above consensus expectations.”