Chief executive Alex Baldock is pushing ahead with a transformation plan for Currys, which focuses on leveraging omnichannel and credit, and more recently addresses inflation and the rising cost of living.

currys exterior

The group recorded “encouraging” results in 2021/22 as total sales edged down 1.9% to £10.1bn in a year of “significant change, uncertainty and disruption”.

So how is Currys reacting to the current macroeconomic environment? Here are five things you need to know about this British electrical retailer from our Prospect analysts.

1. Surging inflation and immediate focus

There is no doubt that the pandemic has fundamentally changed people’s buying habits. In addition, inflation in Currys UK and Ireland market this year alone increased operating costs by more than £50m.

This was driven by around £22m each for wages and shipping with a further £8m in energy costs. Energy bills are anticipated to continue rising later in the year after a new energy price cap is put into effect from October.

Against this inflationary headwind, Baldock has given three areas for the business to focus on in 2022/23: the rising cost of goods; soaring operating costs; and tightened consumer spending. Under each area, Currys has provided suggested mitigation as outlined below:

 

With consumer confidence at an all-time low, discretionary spend on items such as electricals may be reined in. However, Prospect sees an opportunity for the retailer to drive growth through the sale of energy-efficient appliances as customers aim to get more bang for their buck from essential home appliances.

Additionally, better pricing and promotional strategies, range optimisation and a focus on more profitable categories will be key to maximising the potential opportunities.

2. Sales performance in recent years

Currys’ total sales reached £10.1bn in 2021/22 and online accounted for 35% of sales. The group’s total sales fluctuate around £10bn but have seen a slight downward trend year on year.

 

As a share of total sales, online accounted for 27% in 2019/20 and soared during the pandemic, peaking at 48% of total sales in 2020/21.

Online sales declined 13% in 2021/22 owing to customers returning to Currys’ 300 stores following the lifting of pandemic restrictions. Prospect forecasts the online share of sales to now stabilise around this level.

 

3. International share rising as UK declines

Currys’ international business is focused on markets in which it holds a leading position: the Nordic countries and Southern Europe (Greece). 

The proportion of group sales that it rakes in from overseas markets is climbing year by year and now accounts for almost half of Currys’ total revenues. 

Even though the group’s total sales are yet to recover back to pre-pandemic levels (£10.4bn in 2018/19 versus £10.1bn in 2021/22), the percentage of international sales has increased from 38% to 46%, growing at a rate of 20%. 

 

This growing proportion indicates that the group’s international expansion strategy is working well.

It is worth noting that Currys’ Nordic customer club membership has contributed largely to brand loyalty in the region. In 2021/22, its Nordic customer club members grew 26% year on year to 6.8 million members, representing 45% of Nordic revenue. 

By contrast, the climbing international sales share also highlights a shrinking domestic share, with the chart below showing a slipping trend for the retailer’s UK sales year on year.

 

Interestingly, Currys’ UK loyalty scheme Perks, which launched in late 2021, originated from its operations in the Nordics. In line with the group’s rebranding, Currys Perks offers member-only discounts, exclusive offers and free giveaways.

In this inflationary environment, the UK membership scheme could be a good opportunity to broaden its reach to existing and new customers, especially at a time when finances are tight. 

4. Tech to increase customer engagement

As an electrical retailer selling technology, Currys has increased its emphasis on showcasing the latest technology and creating a seamless end-to-end journey for customers.

The retailer recognises the importance and potential of its physical locations. Significant investment into areas such as Experience Zones and Gaming Battlegrounds shows a willingness to innovate when it comes to customer acquisition and retention. 

In June 2022, Currys signed an exclusive e-sport partnership with Williams Racing, facilitating a virtual driving experience for customers in 52 of its stores.

currys shoplive

Currys launched its 24/7 ShopLive virtual shopping service to serve customers back in 2020 when the pandemic first hit and all stores were closed owing to lockdown.

The service uses video links to connect online customers with store staff who can give live product demos and offer advice.

According to the retailer, by mid-2022 a total of 4 million calls were made showing that customers are still loving the service, which is starting to pay dividends for the company. 

In May 2022, Currys announced its RepairLive service to help customers get tech up and running again through a video call.

This innovation is valuable for customers, saving time and effort to diagnose and fix issues with their tech products.

5. Differentiating through stores and expertise

Many customers are inspired by technology but require assistance when making big-ticket purchases. Currys is aiming to differentiate itself through its stores by equipping staff with the expertise to advise customers, both in store and online through ShopLive.

Currys also invested in its staff with an increase in hourly pay to a minimum of £10 in March this year. The rise comes into effect at the start of August and for employees in London will bring the hourly rate to £11.05.

Currys’ chief people, communications and sustainability officer Paula Coughlan said: “We understand the mounting pressures from the increased cost of living and what this means for our colleagues.

“We want to make sure we’re doing our part to support them and that’s why we’re proud to offer higher hourly base-pay rates across our 10,000 colleagues. At Currys, our colleagues are our magic ingredient.”

As customers tighten their purse strings, Currys’ price-match strategy is another key differentiator. The retailer says it will price-match any product against any other UK retailer, online or in store, with the promise: ‘You won’t get it cheaper. Full stop.’

The price promise extends to seven days after the purchase is made, giving cost-conscious consumers a chance to check back and compare prices. This assurance could prove valuable to customers, particularly considering that John Lewis dropped its ‘Never Knowingly Undersold’ guarantee in August.

In support of its investment in pricing and staff, Currys has made significant cost savings throughout the business, including £12m across its supply chain and £30m in IT. In-store changes to the operating model reduced its cost base by a further £8m.