Dixons Carphone’s Nordics business is brimming with confidence and is enabling the electricals specialist to enter unexpected areas.
The Elkjøp business, which is known as Elgiganten outside of Norway, is said to inspire such love in its staff that one employee even tattooed the company name on his leg.
Elkjøp has a 27% share of the market and its nearest multichannel competitor is Expert, which trails with a 7% share.
That dominant position has led to a confidence bordering on the arrogant.
Expert is launching a new big box format called Power to take on Elkjøp’s large stores, but Dixons Carphone is not letting that concern it.
Elkjøp chief executive officer Jaan Ivar Semlitsch dismissed the Power name and said he “initially thought it was a washing powder”, while Dixons Carphone boss Sebastian James added he was “thrilled” because he believes it is “going to consume a massive amount of cash and be a catastrophe for them”.
James believes the main area where Dixons Carphone’s UK business can learn from Elkjøp is in its sales prowess.
“The differences are a relentless focus on sales and margins, which makes the UK look a bit amateur in comparison,” said James on an analyst tour in Stockholm.
On the surface the retailer’s UK and Nordics businesses look very similar. The Phone House store in Nacka, Stockholm, is near-identical to the appearance of a Carphone Warehouse store.
Even elements of the merger are being replicated in cut-and-paste form in the Nordics. There has been an office merger akin to the one in the UK and a store-within-store concept is also being trialled.
A short trip across Stockholm to the Elgiganten Phone House store in Liljeholmen shows the store-within-store format in all its glory.
Inside a number of technology innovations are evident, including a computer that allows customers to enter their phone number and social security number to be told when they are due an upgrade.
James seems enthusiastic about such technology being introduced into the UK, but is less enthused by a ticketed queuing system. Instead he prefers a system that will text people when it is their turn in the queue.
Beneath the surface
When you scratch beneath the surface, it becomes apparent there are major differences between the UK and Nordics markets.
That has resulted in Elkjøp entering some unexpected product categories, ranging from own-brand coffee beans to kitchen work surfaces.
Elkjøp’s own-brand turnover has increased dramatically since launch and now accounts for 5% of total sales and is rapidly catching up on the 10% of own-brand sales made in the UK.
James believes the UK is more fixated on brands and consequently Elkjøp’s private label ranges have the greater potential.
Elkjøp has capitalised on the Scandinavians’ love of coffee with an own-brand coffee range and is also selling copycat Nespresso capsules, which Dixons Carphone is unable to sell in the UK after a showdown with Nestlé.
Elkjøp is even targeting Ikea’s dominance within the kitchen market and has made a major investment in the area as it seeks to set the foundations for a ‘smart kitchen’ proposition.
Elkjøp claims its kitchen range is more flexible than Ikea’s and has helped it grab market share from the Swedish furniture giant. The retailer says it sells 36 kitchen doors compared with Ikea’s 19 and 37 kitchen surfaces against Ikea’s 15.
While Dixons Carphone only has a 12% market share of kitchens in Norway and 5% in Sweden, it has earmarked this area as a key platform for future growth.
It is yet another example of how traditional boundaries are being broken down in retail and is a lesson in how competition can come from the most unlikely of places.