Once a stalwart of Christmas and Boxing Day Sales shopping, the pressure from the cost-of-living crisis meant electricals presented a mixed bag for retailers over this festive season.
Currys group sales fell 6%, driven by a 5% slump in like-for-like revenues in the UK and Ireland and a 7% dip in international sales. AO upped its profit expectations despite a 17.2% sales dip, while value-led Marks Electrical had a standout season, reporting a 33.4% boost, putting it 22% ahead in the year so far.
But what do these performances tell us about how consumers shopped for electricals this year? And what do they reveal about shoppers’ mindsets? Here are the key insights from the Christmas trading updates in the category.
The World Cup didn’t sell TVs
Sporting events such as the football World Cup can be a key driver for customers investing in a new TV, though Currys did not feel the benefit this year.
“There was no discernible impact from the World Cup on TV sales at all,” said Currys chief executive Alex Baldock.
Although disappointed, Baldock told the press this week that he was not surprised.
“We hadn’t counted on a winter World Cup giving us a boost of large-screen TVs, so we weren’t expecting it. Perhaps we might have been hoping for it, but it didn’t happen. In fact, now is a particularly good time to go out and buy a premium large-screen TV because it’s one area where there is deflation in the market,” he explained.
Marks Electrical seemed to fare better in the TV department. Founder Mark Smithson attributed some of the company’s success to its investment in TV campaigns over the Black Friday and Christmas Sales peaks, which also coincided with the World Cup.
Smithson said this led to “increased website traffic and broad-based revenue growth across the UK”.
Practicality over indulgence
Amid financial pressures, shoppers opted for practical purchases and spent less on expensive treats or upgrades that were not strictly necessary.
In TVs, Baldock said Curry’s has not seen the willingness to buy replacements “to the extent we might have done in more affluent times” and consumers are willing to hold on to their TVs for longer.
Small, high-efficiency appliances were one of Curry’s standout categories, as shoppers snapped up products that might save them money on their electricity bills further down the line.
“Air fryers are the obvious [top seller],” said Baldock. “Everyone’s talking about them and our sales are up 500%.
“Microwaves did really well, with sales up 30% year on year, and tumble dryers were also very strong.”
Although AO did not provide details as to which categories did or did not perform well over Christmas, its sales dip tells us shoppers were being more cautious with their cash on the whole.
Bigger was better
Despite the major purchase index trundling along at historic lows, the drive to upgrade old, inefficient white goods beat out low consumer confidence.
Marks Electrical said its stellar performance was partly due to sales of its energy-efficient laundry appliances as customers looked for ways to save on energy bills.
Currys reported a similar trend as sales of heat pumps, tumble dryers and washing machines were favoured by customers.
Baldock said: “In many cases, customers were actually trading up to more expensive washing machines in contrast to computers, for example, where many customers were trading down to less expensive laptops.
“Customers see that they can afford to spend a little bit more upfront on an energy-efficient washing machine because it’s going to be less expensive for them over its life.
“Then the customer gets the energy-efficient product and they get to feel good about sustainability and, of course, they save money over the life of the product.”
Credit was king
The caveat to spending big on electricals and appliances, practical or otherwise, is that shoppers still have cash flow issues, so more spending went on credit.
Currys reported a record year for its in-house credit offer with credit sales up 27% and now accounting for 18% of total sales.
Baldock said although the use of its credit service was growing before the pandemic, recent adoption has been far more rapid and shoppers have been taking advantage of credit to increase their spending in categories such as domestic appliances, opting for higher-quality products.
He said: “In a cost-of-living crisis, clearly, credit comes into its own. We don’t think you can see technology as a discretionary category and would argue technology plays an ever-more important and essential role in people’s lives.
“A few years ago, we had very little credit to speak of but in this market, where technology might be exciting but it’s expensive, customers need help to afford it. We saw an opportunity to not just help our customers and be preferred by them, but to have stickier and more valuable customer relationships as a result. So the further north that 18% goes, the happier we’ll be.”
Use of credit makes for a more loyal customer, says Baldock, with 70% of credit shoppers more likely to return within the year to shop with Currys.