Bigger stores to provide electricals market boost

The development of larger stores will be one of the drivers of growth in electricals retailing over the next five years, according to research house Verdict.

In 2007, out-of-town electricals stores will reach an average of 1,115 sq m, up from 955 sq m this year.

According to Verdict Forecasts Electricals 2007, such units will achieve dominance of local markets through range and pricing offers. Consumers' 'giddy love affair with technology' will underpin expansion.

The electricals market will remain one of the fastest-growing retail sectors, increasing by 36.5 per cent to be worth£28.7 billion.

Demographic and lifestyle changes will also help to push sales. 'Growth in the number of technologically-minded empty-nesters with larger discretionary incomes will help drive demand,' according to Verdict.

Being the largest and the cheapest will not be a guarantee of success, however.

Threats to the electricals market include deflation, averaging 5.2 per cent a year between 2002 and 2007, which will force retailers to drive up sales volumes just to stand still. There will also be stiffer competition from food retailers.

Verdict points to Tesco's recent success with DVDs as a 'taste of things to come'. And, despite Dixons Group and Comet accounting for a combined market share of 28.1 per cent, Verdict predicts greater 'destination appeal' from niche players such as Sevenoaks Hi-Fi and Richer Sounds.