Dixons CEO Says Profitability Beats Amazon as Stores Sell Extras
Dixons Retail Plc (DXNS) Chief Executive Officer Sebastian James said the U.K.’s largest electronics retailer beats online-only competitors such as Amazon.com Inc. (AMZN) for profitability as stores help it lure customers into buying the latest, high-margin products and extras.
Dixons, with chains PC World and Currys, has 486 U.K. shops and enjoys an advantage over online operations in selling newer, higher-margin items as employees can explain and show off features on products such as the latest Samsung Electronics Co. televisions, James, 47, said in an interview at the Retail Week Conference in London today. “Suppliers explicitly reward us for our ability to demonstrate these products,” he said.
Shop assistants in Dixons’ stores typically sell another two items every time a shopper buys a washing machine, such as home delivery and installation, again boosting margins, James said. Dixons is competing with cheaper online rivals by focusing on customer services to sell more expensive, newer items and more products such as software and laptop cases.
“Overall we are structurally a bit more profitable,” said James, who has overseen the retailer for more than a year. “Laptops is the best, the most difficult is white goods because they are big and cost a lot of rent.”
Even with the additional store costs, rents and employees, Dixons beats online rivals on profitability, James said. Online operations also have costs of acquiring customers through channels such as paid-for Google Inc. search advertising.
Dixons is considering adding QR codes, which operate like bar codes, next to each product in stores, said James. Shoppers could scan them on their smartphones to link to a price comparison website, potentially with cheaper offers from competitors.
While prices at Currys and PC World are still about 6 percent more expensive than Amazon, shoppers will still buy their products in-store when they weigh up the benefits, James predicted. The difference was 22 percent three years ago, said James, who added that he hopes to bring it down to 3 percent for the stores’ 33,000 products.
Underlying pretax profit fell 17 percent to 70.8 million pounds ($106 million) in the fiscal year through April 28 at the Hemel Hempstead, England-based company.
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