UK Electricals Retailers 2007

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UK Electricals Retailers 2007
Technology pipeline underpins growth

 Sector Report - Published August 2007



                       Implied inflation/deflation in total retail and
                            electricals expenditure 1997-2007


                       4.0
                              1.8    1.6
                       2.0
                                            0.1            0.3
                       0.0                                                  -0.5                   -0.5
                                                   -1.2             -1.2                    -1.2
                                                                                     -1.6
     Y-o-Y % Change




                       -2.0

                       -4.0   -4.5
                                            -4.9
                                     -5.4
                                                                            -6.2
                       -6.0                                         -7.0
                                                   -7.4                              -7.6
                                                           -8.0
                                                                                            -8.5   -8.4
                       -8.0
                                                                                                          -9.4
                      -10.0

                      -12.0
                              1997   1998   1999   2000   2001     2002    2003     2004    2005   2006   2007

                                                          Electricals      Total Retail




 Source: UK Electricals Retailers 2007


“Strong price deflation is endemic in the electricals sector with most new
products released at high price points to maximise the profitability of early
adopters before price points are gradually reduced to increase penetration as
the technology ages and as volume supply kicks in. The rate of deflation varies
significantly by sub sector with heaviest price cuts recently in the audio visual
and information processing sub sector. In 2007 we expect price deflation to be
higher than in any of the ten years previously, largely due to falls in the retail
prices of flat panel TVs...”

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Some key findings from this report...

• In 2007 electricals is set to be the fastest growing major retail
                                                                                   Argos market share performance 2002-2007
  sector for the second year running. Verdict expects the market to
  grow by 4.2% to £24.3bn during 2007 boosted by continuing demand                 %


  for new digital technologies as well as an outstanding performance
                                                                                  10.0

                                                                                                                                     9.4
                                                                                                                              9.2


  from the games consoles and software sub sector.                                 9.0                                 8.8



                                                                                                             8.0
                                                                                   8.0

                                                                                                   7.4


• The sector as a whole has relied heavily on games consoles and                   7.0
                                                                                          6.7


  software to drive growth. Accounting for 82.3% of total value                    6.0


  growth in the whole sector, when the sub-sector is stripped from the
                                                                                         2002      2003     2004       2005   2006   2007




  market, the remaining sub sectors will see collective growth of just
  0.8%. This does not compare favourably with 3.7% growth the                  Source: UK Electricals Retailers 2007


  remaining sub-sectors achieved in 2006.                                       "Argos has enjoyed a meteoric rise since the turn of
                                                                               the millennium, improving its electricals market share
                                                                                   by an impressive 2.7 percentage points. Verdict
• Price deflation has hindered the progress of the audio-visual                     estimates Argos to be the UK's second largest
  sub-sector, in 2007 in particular flat panel TV. In 2006 price               electricals retailer behind Currys - with a market share
  deflation moved flat panel TV to mass market price points which in            of 9.4% in 2007 - substantially larger than other non-
                                                                               specialists, and 1.4 percentage points above Comet..."
  turn boosted demand, while in 2007 further price deflation has left
  retailers battling to boost volumes sufficiently to grow sales values.
                      Order the new ‘UK Electricals Retailers 2007’ report
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 UK Electricals Retailers 2007
 The electricals sector’s over performance is due largely to a continued
                                                                                            Electricals market composition 2006
 strong performance of brown goods, driven by continual new technology
 launches and existing product innovation. The downside of this is that
 older products experience massive deflation but to date retailers have                             Grey
                                                                                                   25.3%

 been able to push volumes enough to counter this. A robust housing
 market had also been a key factor in driving sales of white goods.                                                                       Brown
                                                                                                                                          48.3%



 UK Electricals Retailers 2007 is a new report published by Verdict that
 analyses key electricals retailers in depth, providing market shares, market                       White
                                                                                                    26.4%

 sizes and forecasts for the full year in 2007. It also details the key
 operating statistics and distribution channels – all important measures for    Source: UK Electricals Retailers 2007

 benchmarking and forecasting.
                                                                                     "The electricals market is split into three major
                                                                                   components - brown, white and grey goods. The
 Benchmark the performance of the UK electricals retailers market               largest component is brown goods which in 2007 we
 and its key players and understand the key issues and drivers of the               expect to account for 48.3% of the market, 0.3
 market and the strategies needed to succeed with this new report.               percentage points lower than in 2006. Though sales
                                                                                 volumes are likely to remain brisk for the rest of the
                                                                                 year, heavy price deflation will mean that both white
                                                                                and grey goods will outperform brown goods in value
                                                                                                                 terms..."

 This new report will enable you to...

 • Quantify key retail trends and accurately predict future
                                                                                  Total consumer expenditure on electrical goods
   electricals retailing growth with this report’s company profiles                                1997-2007
   detailing retail proposition, marketing and operations analysis and
   market outlook and five year trends in market share, sales, profits,                    Current PricesY-O-Y Change Constant (2003) Prices Y-O-Y Change

   sales densities, space allocation, space growth and store portfolios.            1997
                                                                                           £m
                                                                                                  15,699
                                                                                                         %
                                                                                                                   9.5
                                                                                                                       £m
                                                                                                                                      10,965
                                                                                                                                             %
                                                                                                                                                        14
                                                                                    1998          16,439           4.7                12,071          10.1
                                                                                    1999          17,521           6.6                13,460          11.5
                                                                                    2000          18,284           4.4                15,035          11.7

 • Benchmark your competitive strategies using the company
                                                                                    2001          19,459           6.4                17,201          14.4
                                                                                    2002          20,308           4.4                19,159          11.4
                                                                                    2003          21,070           3.8                21,070            10
   profiles contained in this report for key retailers including Argos,             2004
                                                                                    2005
                                                                                                  21,876
                                                                                                  22,302
                                                                                                                   3.8
                                                                                                                   1.9
                                                                                                                                      23,468
                                                                                                                                      25,914
                                                                                                                                                      11.4
                                                                                                                                                      10.4

   Asda, Comet, DSG International, Game Group, Jessops, John Lewis
                                                                                    2006          23,296           4.5                29,255          12.9
                                                                                    2007          24,286           4.2                33,260          13.7


   and Tesco.
                                                                                Source: UK Electricals Retailers 2007

 • Assess the growth potential and the challenges facing the key
                                                                                 "Apart from a blip in 2005, the electricals sector has
   electricals retailers with this reports in-depth analysis of market           performed strongly over the last ten years. Between
   drivers, key issues and outlook.                                             1997 and 2007 the market grew by 54.7% to £24.3bn.
                                                                                 Of all the major UK retail sectors, just music & video
                                                                                and homewares have achieved higher growth rates..."
 • Develop more effective strategic responses using this report’s
   actionable recommendations for how retailers must cope with the
   changing electricals retail market.
Key issues examined in this report...
• Specialists continue to underperform. Since 2004, specilaist
                                                                                        Growth rates of major home related retail
  electricals retailers' sales have underperfomed the electricals market                              sectors 2007
  and this is largely attributable to the rapid growth of non-specialists in
  the market.                                                                      5.0
                                                                                           4.5
                                                                                                   4.2
                                                                                   4.0

                                                                                                          3.0 3.0             2.9 2.8
                                                                                   3.0
                                                                                                                                                                         2.3

• Multi-channel retailing the key. Developing a multi channel offer is
                                                                                                                                                 2.2
                                                                                   2.0



  proving crucial among retailers of electricals products. Both specialists        1.0
                                                                                                                                                        0.2
                                                                                   0.0

  and non-specialists have identified this as a growth opportunity and as          -1.0
                                                                                                                                                                  -0.2




  such have invested heavily in developing an holistic multichannel offer.
                                                                                          Electricals    Homewares        Total Retail          Furniture &    DIY & Gardening
                                                                                                                                              Floorcoverings

                                                                                                                          2006        2007e




• Changes in sub-sectors driving growth. In 2007 Electricals market            Source: UK Electricals Retailers 2007


  growth is being driven by different product categories than in 2006.          "In 2007 Verdict estimates the electricals market will
  Demand for big ticket flat panel TV rocketed in 2006 and it was the            grow by 4.2% to £24.3bn. Though this growth is a
  key driver of growth. Audio visual contributed to almost one third of          shade slower than what was achieved in 2006, we
                                                                                 estimate for the second year running the sector will
  all the growth in the market. Other key contributors to growth were
                                                                                 achieve the strongest performance across all major
  photographic and optical equipment market, games consoles and
                                                                                                                 retail sectors..."
  software.



Your questions answered...

• What are the key drivers of growth in the UK electricals retailing
                                                                                        Smaller electricals specialists market share
  market?                                                                                        performance 2003-2007e


                                                                                    1


• Who are the top electricals retailers in the UK and how do they                 0.8
                                                                                                                                                                   0.8

                                                                                                                                                  0.7

  operate?                                                                        0.6
                                                                                                           0.6                 0.6

                                                                                             0.5            0.5

                                                                                             0.5                                0.4                0.4              0.4
                                                                                  0.4



                                                                                  0.2


• Which sub-sectors have outperformed the UK electricals market in                  0


  2007 and which sectors have struggled?
                                                                                           2003            2004               2005                2006             2007e

                                                                                                                     Maplin      Richer Sounds




                                                                               Source: UK Electricals Retailers 2007


• What developments are likely to happen in the UK electricals retailing         "Due to the low margins, high deflation and strong
  market?                                                                      rivalry in the UK electricals market, smaller players have
                                                                                struggled in recent years, with both PowerHouse and
                                                                                Millers Brothers falling into administration in 2006. To
                                                                                this end, the likes of Richer Sounds and Maplin have
• What are the key issues affecting UK electricals retailing market?
                                                                               survived by executing a unique proposition and clearly
                                                                               differentiating themselves from the leading electricals
                                                                                                                     retailers..."
                   Order the new ‘UK Electricals Retailers 2007’ report
               before Friday 24th August 2007 and SAVE £165/$317/€239...


www.verdict.co.uk


 Sample information from ‘UK Electricals Retailers 2007’

        Chapter 2: Market Analysis


                                 Figure 4: Audio-visual goods share of electricals
                                             market 2002 and 2007

                                       %
                                      25
                                                                          22.1
                                                            21.4

                                      20



                                      15



                                      10



                                       5



                                       0
                                                           2002           2007




                         Source: UK Electricals Retailers 2007




        • Verdict expects audio-visual to be worth £5.4bn in 2007. It is the largest sub sector in the
          electricals market and since 2002 has grown by 23.5%. This growth has been largely driven
          by the launch of new technology and also price deflation, which has, in turn, boosted sales
          volumes. In recent years such technologies include MP3 players, digital cameras, digital
          radios and digital flat panel TVs.

        • During 2006 price deflation made flat panel TVs more affordable and moved the product
          from a niche position to the mass market. This was the main reason why the market grew
          by 6.8%, though other products such as MP3 players also contributed to growth. The
          summer's World Cup football tournament also encouraged customers to bring their flat
          panel TV purchases forward, or sometimes upgrade them to larger or more superior
          products.

        • Another underlying driver of flat panel digital TVs is the impending digital switchover - the
          process of analogue TV transmissions being turned off - which is set to begin in late 2007
          and be completed by 2012.

                                                                   -32-



       Order this report today to find out more...
Table of Contents

CHAPTER 1: EXECUTIVE SUMMARY                                        CHAPTER 13: MAIL ORDER RETAILERS
•   Key Findings                                                    •   Overview
•   Main Conclusions                                                •   Littlewoods Shop Direct Home Shopping
                                                                        - Trading to April 2006
CHAPTER 2: MARKET ANALYSIS
•   Definition                                                      CHAPTER 14: MANUFACTURER RETAILERS
•   Key Drivers                                                     •   Overview
•   Overview                                                        •   Sony
•   Expenditure Analysis by Sub Sector                              •   Panasonic
•   Brown Goods: Audio-visual Equipment
•   Brown Goods: Photographic & Optical Equipment                   CHAPTER 15: MOBILE PHONE RETAILERS
                                                                    •   Overview
•   Brown Goods: Games Consoles & Software
                                                                    •   Carphone Warehouse and Phones4U
•   White Goods: Major Household Appliances
                                                                    •   Network Operator Stores
•   White Goods: Minor Household Appliances
                                                                        - Outlook
•   Grey Goods: Information Processing Equipment
•   Grey Goods: Telephone & Fax Equipment
                                                                    CHAPTER 16: ONLINE ELECTRICALS RETAILERS
•   Electricals Specialists
                                                                    •   Overview
•   Channels of Distribution
                                                                    •   Pureplay Retailer Comparison
                                                                    •   Amazon (www.amazon.co.uk)
CHAPTER 3: COMPANY DATA ANALYSIS
                                                                    •   Dabs (www.dabs.com)
•   Market Shares
                                                                    •   Empire Direct (www.empiredirect.co.uk)
•   Operating Statistics
                                                                    •   Outlook
•   Space Allocation
•   Advertising Spend
                                                                    CHAPTER 17: SMALLER ELECTRICALS SPECIALISTS
                                                                    •   Overview
CHAPTER 4: OUTLOOK
                                                                    •   Maplin Electronics
•   The electricals sector is again set to be the fastest growing
                                                                    •   Richer Sounds
    major retail sector in 2007
•   But different sub sectors will drive the growth
                                                                    CHAPTER 18: GLOSSARY
•   Specialists continue to underperform
                                                                    •   Financial Statistics – VAT
•   Multichannel the key
                                                                    •   Trading Profile
                                                                    •   Physical Development
CHAPTER 5 - 12: COMPANY COMPARISONS
• Argos, Asda, Comet, DSG International, Game Group,
  Jessops, John Lewis and Tesco:
  - Overview
  - Market Performance
  - Trading Record
  - Recent Trading
  - Store Portfolio
  - Retail Proposition
  - Outlook
                       Order the new ‘UK Electricals Retailers 2007’ report
                   before Friday 24th August 2007 and SAVE £165/$317/€239...


www.verdict.co.uk


Table of Contents (Contd.)

TABLES - ABRIDGED                                                   FIGURES - ABRIDGED
• Electricals market definition 2007                                • Implied inflation/deflation in total retail and electricals
• Electricals market – key drivers 2007/08                             expenditure 1997-2007
• Total consumer expenditure on electrical goods 1997-2007          • Electricals market composition 2006
• Audio-visual equipment expenditure 2002-2007                      • Electricals sub sector shares 2002 & 2007
• Photographic & optical equipment expenditure 2002-2007            • Audio-visual goods share of electricals market 2002 & 2007
• Games consoles & software expenditure 2002-2007                   • Photographic & optical equipment share of electricals
• Major household appliances expenditure 2002-2007                     market 2002 & 2007
• Minor household appliances expenditure 2002-2007                  • Games consoles & software share of electricals market
• Information processing expenditure 2002-2007                         2002 & 2007
• Telephone & fax expenditure 2002-2007                             • Major household appliances share of electricals market
• Electricals specialists sales, stores and space 2002-2007e           2002 & 2007
• Electricals channels of distribution 2002 & 2007e                 • Minor household appliances share of electricals market
• Electricals retailers market shares 2002-2007e                       2002 & 2007
• Electricals retailers key operating statistics – trading          • Information processing equipment share of electricals
  2006/07                                                              market 2002 & 2007
• Electricals retailers key operating statistics – stores 2006/07   • Telephone & fax share of electricals market 2002 & 2007
• Electricals specialists space allocation to brown, grey and       • Growth rates of major home related retail sectors 2007
  white goods (Comet, Currys & PC World) 2007                       • Total electricals expenditure growth vs electricals
• Electricals specialists space allocation to brown, grey and          specialists’ sales growth 2002-2007e
  white goods (Game, Jessops & John Lewis) 2007                     • Argos market share performance 2002-2007
• DSG international and Comet advertising spend 2003-2006           • Asda electricals market share performance 2002-2007e
• DSG international and Comet advertising spend by media            • Comet market share performance 2002-2007e
  2006                                                              • DSG international UK market share performance
• UK Electricals growth contributions by sub sector 2006 and           2002-2007
  2007                                                              • DSG international market share by retail brand 2002-2007
• Electricals Multi-Channel Retailing                               • Game Group market share performance 2002-2007e
• Factors impacting profitability 2007                              • Jessops electricals market share performance 2002-2007e
• Argos, Asda, Comet, DSG International, Game Group,                • John Lewis electricals market share performance
  Jessops, John Lewis and Tesco:                                       2002-2007e
  - Overview                                                        • Tesco electricals market share performance 2002-2007
  - Market Performance                                              • Smaller electricals specialists market share performance
  - Trading Record                                                     2003-2007e
  - Recent Trading
  - Store Portfolio
  - Retail Proposition
  - Outlook
• SWOT analysis of manufacturer branded stores 2007
• Which retailers do online electricals shoppers buy from?
  October 2006
• Comparison of pureplay electricals specialists 2007
• Online electricals sales 2002-2006
• Maplin Electronics company overview 2006
• Maplin key operating statistics 2003-e2006
• Richer Sounds company overview 2007
• Richer Sounds key operating statistics 2004-2007e
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