Strategy updateStrategy update/media/Files/D/Dixon... · A leading European specialist electricals Group Country Share of sales+ UK & I 48% Nordics 24% Italy 8% Greece 5% Spain 2%

Strategy updateStrategy update19 March 201019 March 2010

John BrowettJohn BrowettChief ExecutiveChief Executive

Agenda

• Introduction

• Focus on the customer• Focus on the customer

• Store transformation update

• Improving service support for customers

• Winning on the internet• Winning on the internet

• Financials

• The Technology revolution

• Summary

3

• Summary

Renewal & Transformation plan

1. Focus on the customer

2. Focus the portfolio on winning positions

3 T f th b i3. Transform the business

4. Win in the internet market

5. Reduce costs

Target of 3-4% return on sales in the

4

medium term

A leading European specialist electricals Group

CountryShare of sales+

UK & I 48%

Nordics 24%

Italy 8%

Greece 5%

Spain 2%

Czech & Slovakia 1%

O li i

Czech & Slovakia 1%

Turkey 1%

e-commerce* 11%

Online in26 Countries

5+Share of group sales for the current financial year to 9 January 2010* e-commerce is Pixmania and Dixons.co.uk only. Total internet sales including multichannel internet

sales represents approximately 17% of Group sales

Nordics

• Excellent customer service

• Total sales of c.£2.0bn*

• Low cost operating model

• Rolling out Megastores across g gall four countries

• High sales densities

• Multichannel opportunity

• EBIT margin of 4-5%*

• Double digit sales growth

• Gaining market share

6

g

* Based on consensus expectations for year to 1 May 2010

Italy

• 97 stores, largely out of town• Good brand recognition• Considerably improved execution• Turnaround plan going well:

Closed 51 underperforming stores– Closed 51 underperforming stores– Implementing PC City in UniEuro– Better stock control– Cost reduction– Refurbishment of the estate

• New Megastore and refurbished gstores ahead of plan

7

Other International

• Greece– Clear market leader and profitable

Major opportunity to grow sales by opening– Major opportunity to grow sales by opening Megastores and refurbishing and resitingexisting estate

• Czech Republic and Slovakia– Strong position in Czech with developing

business in Slovakia– Reset cost base– Now opening new stores and refurbishing

the estate– Growth as the economies recover

8

Other International

• Spain– PC City was profitable prior to recession

Reduced costs to weather the storm– Reduced costs to weather the storm– Closed 11 stores, now operating 32 stores– Recovery programme on track

• TurkeyTurkey– Successful launch with joint venture partner– On plan with 11 stores open– Promising opportunity in developing

electricals market

9

Agenda

• Introduction





• Financials


• Summary

10

• Summary

Deep mine of customer information to inform decisions

UK stores appeal to wide customer base…

…with higher indexation to more affluent demographic*

250

UK

33m customers

150

200

UK customer Database

24m households

(91% UK coverage)All

channels

0

50

100

c.90% of spend

0Up to £20k £20k -£50k £50k - £75k £75k+

Currys PC World

Focus groups Colleague feedbackExit interviews

Research Contact and complaint analysis

11 * indexed weighting of income Group’s spend in Currys and PC World relative to general retail spend

They’re interested in working out what’s right for me

• Five part selling model

– Continuous training programmeContinuous training programme

– Over 20,000 colleagues through FIVES training

2 000 managers through enhanced training programme

Greet – Engage – Solution – Tailor – Complete

– 2,000 managers through enhanced training programme

– Customer satisfaction and exit surveys now part of pay

G tGrassroots Mystery Shopping

Greet Engage Solution Tailor Result

DSGi Score 80% 48% 87% 75% 84%

%pts var to competition +17% (14%) +20% +17% +28%

12 Based mystery shopping surveys of DSGi and competitor stores

They’re interested in working out what’s right for me

• Over 4,000 colleagues trained in last 12 months

• 250 suppliers training workshops

• Super specialists in key categoriesSuper specialists in key categories

• Online training tools and interactive programmesprogrammes

• Incentivisation to develop product knowledgeg

• Customer journey for the customer and colleague

13

Improving satisfaction measures

Dec-09

Jun-09

0% 20% 40% 60% 80% 100%

Jan-09

E ll t G d A PExcellent Good Average Poor

• Improving advocacy to friends and family– 80% of customers “likely” or “very likely” to recommend– 30% increase in customers stating “very likely” to recommend– As focus shifts increasingly to in-store experience and colleague

14

g y p gquality, opportunity to improve this further

It’s easy to shop and an exciting place to be

• Easier to navigate– Straight aisles– Uncluttered– Clear signage– Better adjacencies

• All key products out for demonstrationAll key products out for demonstration– Play tables– Products live and powered up– No counters/cabinetsNo counters/cabinets

• Supplier branded areas– Specialist support from manufacturers

C t l k d f l• Contemporary look and feel• Improved POS to help choice to suit

need better

15

I can get what I want…

£800 00

£850.0011 4 1 5 11 15SKUS

4 3 1 2 4 5BRANDS

£650 00

£700.00

£750.00

£800.00

£550.00

£600.00

£650.00

£400.00

£450.00

£500.00

£250.00

£300.00

£350.00

C tit 1 C tit 2 C tit 3 DSGi 10/11DSGi 09/10C tit 4Competitor 1 Competitor 2 Competitor 3 DSGi 10/11DSGi 09/10Competitor 4

16

New formats increasing appeal to key customer segments

ATV change of newformats vs control Currys CurrysDigital PC Worldformats vs control y y g

Golden Families

Quality Seekers

Home Movers

Tech Fans

Change in average transaction value amongst key customer segments in the reformatted stores versus unreformatted stores17

Customer feedback

18

Agenda

• Introduction





• Financials


• Summary

19

• Summary

Improvements in time for Peak

• Better ranges – particularly laptops

• Better in store service driven by FIVES t i i & d t k l dtraining & product knowledge

• Better merchandising bringing product to life

• Better availability• Better availability

• Enhanced delivery offering

• New TechGuys rangeNew TechGuys range

• Benefit of brand campaign

• Conversion up in line with new format storesp

• Estimated 3-5% LfL improvement to the base estate

20

Uplifts remain very encouraging

• Average gross profit uplifts* in total estate of 20%• Megastores and combined 2-in-1 stores continue to achieve

50% liftover 50% uplift

• Stores representing one third of UK sales reformatted so far

• Benefit to UK like for likes of approximately 3% over Peak

• Limited experience of second year performance1 M t 1 bi d 2 i 1 11 C S t– 1 Megastore, 1 combined 2-in-1, 11 Currys Superstores and 4 CurrysDigital

– Average of 5 months in second year only

• Early indications are that second year trading remains strong

21 * Gross profit uplift of new format stores completed over last 12 months for the 24 week period to 6 March 2010 compared to the control group.

Focus on Megastores and 2-in-1’s

BrandCompleted as at

12 March 10Planned for 2010/11

financial year

Megastores 8 25

PCW/Currys 2-in-1 8 60

Currys & PC World Superstores 108 12

CurrysDigital 15 3y g

Total* 139 100

Cumulative percent of sales 33% 66%

22 * Store transformation programme impacts 141 stores to date and 150 stores in total over the 2010/11 financial year

Dual branded ‘2-in-1’ stores offer significant potential

• Provides access to the PC World brand in existing Currys markets

• Exploits different customer offering– 18% overlap between Currys and PC World customers

• Greater stock efficiency, with one consolidated range to display

• Best of both worlds in colleague knowledge and selling skills

– Clear branding of different expertise across the store

• Tech Guys service centre in store• Opportunity to consolidate two stores in smaller catchments

– Pragmatic approach to property– Long term reduction in costs

• 15,000ft2 to 35,000ft2– average rent of £18 - £25 per ft2

23

Megastores operate enhanced model

• Currys and 2-in-1 formats• 35,000 – 55,000ft2

– average rent of £22 - £28 per ft2

• c.£100m+ catchment• Range dominance

– Many more branded supplier concessions– Premium executions (e.g. hifi studio, coffee area, live kitchen)

• Business structure– Top calibre Store Director remunerated in line with store

performance 8performance– Department Managers with greater scope for product

specialists

• Stock management key

8

10

– Fast-paced, frequent replenishment– Stock disciplines

• Up to 70 locations identified

52

Completed Megastores Refit current stores Resite

– Standalone Currys as well as combined 2-in-1’s– Majority within existing estate

24

Making the portfolio work - examplesNewbury Halifax Guildford Thurrock

Market size £35m £66m £180m £523m

Indexation(propensity to buy electricals)

White Goods: 1.09Brown Goods: 1.09PC Goods: 1.10




Existing stores (selling space)

Currys of 12,750ft2No PCWorld

Currys 21,000 ft2PC World 12,750 ft2On separate Retail Parks.

Currys 12,000ft2PC World 15,000ft2 side by side

Currys 29,000 ft2PC World 23,000 ft2On same retail park

Rationale Good demographicNo PC World present

Two low turnover stores with good potential to exit

Large conurbation, good demographic

Very large conurbationNo PC World present with good potential to exit

one locationdemographicGood opportunity with existing property

Plan Create 18,000ft2 combined 2-in-1 within existing Currys using mezzanine

21,000ft2 combined 2-in1 store in existing Currys.Close PC World and market

Combine into one 27,500ft2 2-in1 Superstore

Currys store resited to create 70,000ft2Megastore.

25

using mezzanine Close PC World and market the lease

Superstore Megastore.PC World refitted

Summary

• Continuing good results from refits

• Learnings rolled out resulting in improvements to underlying business

• Focus on higher return 2-in-1 stores and Megastores– Bringing PC World to more markets

• 60 existing locations available for Megastore format

• 100 locations provide opportunity for 2-in-1 stores where PC World does not existdoes not exist

• Pragmatic approach to consolidation in smaller catchments

f 66 00• Long term goal to move from 664 stores to c.500 stores– Solutions already in place for 127 locations

26

Agenda

• Introduction





• Financials


• Summary

27

• Summary

Improving the service support for customers

• Market leading next day delivery– 3 hour time slots 0700 to 2200– 60,000 weekly home delivery drops, y y p– Free delivery option– Follow-me-home in Megastores– Free recyclingy g

• 95% Right first time delivery and improving• Single national network in place

lowest cost in UK– lowest cost in UK– Delivery & installation done at the same time

• Service centre training4 200 t i i d i l t 3 th– 4,200 training days in last 3 months

• Process simplification– Improved cycle times

28

– Cost reduction

Improving the service support for customers

Products● 62 New ranges launched this year● E.g. Data Vault, supercharge PC, TechFriend support● Better merchandising with products

Repairs and Returns

● Rationalise spares locations● New repair centre and laboratory

designed and under construction● Improve processes

6080

100 Repair times

2008/092009/10

me

inde

xed

● Improve processes

Field operations

● Rationalise Tech Guys hubs● Integrate delivery and installation● Introduction of PDA’s reduces costs and enables

02040

TV Laptop

Rep

air t

im

p ● Introduction of PDAs reduces costs and enables live customer feedback

Contact Centre

● Contact Centre now in-house● “Save our customers” under way● Simplified interactive voice routing

80100

Call costs2008/092009/10xe

d

Centre ● Simplified interactive voice routing● Root cause analysis of calls

Operational ● Cost efficiencies 0204060

S

Cal

l cos

t ind

ex

efficiencies ● Improved cycle times

29

Service Technical

They make things work and keep them working…

30

Agenda

• Introduction





• Financials


• Summary

31

• Summary

Customers and suppliers want multichannel retailers

Customers

• Online research tool

Suppliers

• Enables range display

• Convenience• Touch, feel & look of products

g p y

• In store experience

Demonstration of prod ctsin store important for choice• Collect@store• Reassurance and service

• Demonstration of products

• Sell up to higher value/quality• Reassurance and service• Well-known brand• Availability and pricing

• Colleague training

• Solution selling

• After sales options eg Delivery, installation, repair

• Advertising

32

DSGi has strong internet presence

• Leading technology in house

• C.£1.4bn of sales on line

Leading technology in house– E-merchant platform

• Multiple features & benefits– Bundling and attachments

63% 27% 7%

Bundling and attachments– Navigation– Optimised for search engines

and shopbots

• Strong growth rates from all pure internet operations

• Licensing of technology• PIX place

– 3,000 reseller membersPIXmania UK Nordics Italy Spain Greece CE

+23% +17% +83% +24% +51% +235% +14%

,– Category extensions

33 Bar chart shows share of Group internet sales excluding collect@store sales in the UK and DSGi business

UK sites launched on e-merchant platform

34

UK sites launched on e-merchant platform

• Easier navigation

• Key deals

• Deal by category

• Popular brands

• Package deals and attachments

35

Internet is a growing opportunity

• Multichannel approach gives customers choice• Pure play complements multichannel operations• Large multichannel operator can exploit scale benefits

– Buying and sourcing benefitsS l ti lli hi h tt h t f i d ti l– Solution selling – higher attachments of accessories and essentials

– Value added services and help– Higher basket and ATV in store

• DSGi can leverage scale efficiencies– Lower cost of operation

Shared supply chain– Shared supply chain

• Grow online sales as internet mix increases– Same online share as offline

36

Nicholas CadburyNicholas CadburyGroup CFOGroup CFO

Agenda

• Introduction





• Financials


• Summary

38

• Summary

Reduce costs and working capital

• On target for £50m savings this yearSimplify y

• Further £150m targeted over next 3 years

p y

Better• Opportunity to reduce stock

furtherEasier• Stock turn improving,

up 10% so farCheaper• Continuous process improvement

p

39

Fundamental restructuring of costs

Organisational Design Process re-engineering

Head

Team1 Team 2 Team 3

Admin Step 1 Step 2 Step 3

Team1 Team 2 Team 3

• Aligning operations with business strategy

• Remove duplication and layers

• Clearly defined and balanced processes

• Lean Six Sigma methodology used• Clarify accountabilities

• For example: • Integrating Currys & PC World

commercial teams

• Re engineering processes

• For example: • Call handling• Delivery & Installationcommercial teams

• Integrating service and retail teams

• One marketing function

• Delivery & Installation• Stock processing in store• Off shoring back office

administration• Advertising efficiency

40

Re-engineering processes - examples

CheaperEasierBetter

R d t k Has enabled products being Colleagues focused on the highReduce stock loss £6m

Has enabled products being more accessible to customers,

e.g. on play tables

Colleagues focused on the high priority areas & given right tools

to reduce stock loss

Bring contact centres

in-house£12m

Colleagues now find it easier to do their jobs, as the information

they need is to hand

Customer issues being escalated quickly for resolutionRoot causes being analysed to

avoid repeat problems

£18mCombine

services field forces

Customers get flexible choice of appointments, with multi-

skilled colleagues

Colleagues have less drive time between appointments, &

broader career optionsforces g p

Improvements to distribution £1m +Availability has improved as a

result of cutting lead time

Improved in store processesLess storage & handling

requiredLess forecasting

41

Improving stock

• Stock turn increased by 10%

• Aged stock significantly

Stock improvements over 6 months old

90

100g g yreduced

• Increased availability50

60

70

80

90

ed s

tock

leve

ls

• Improved processes to manage range changes

I d t li ti f 10

20

30

40

50

Inde

xe

• Increased centralisation of stock holding

• Automated replenishment in

0

over 1 year 6 to 12 months

Oct 08 Oct 09

Automated replenishment in place

• Further opportunities identified

42

Group Capital expenditure

2009/10 2010/11Underlying £50m £65mUnderlying £50m £65mNew formats £120m £150mTotal £170m £215m

• Expected payback of 3-4 years• Higher SKU count

Hi h t k t+ Higher stock turn= Neutral working capital

43

Jeremy FennellJeremy FennellCategory Director - ComputingCategory Director Computing

Agenda

• Introduction





• Financials


• Summary

45

• Summary

Hardware development has accelerated

Laptops• Thinner/lighter Televisions• Faster• Longer battery life• Colour/design

• LCD/Plasma• LED• 3DTV• Better design

Netbooks• New category• Viewing on the move

Better design

• Viewing on the move

Networking

White goods• Digital controls• Energy efficiencyg

• New technologies• More WiFi• More devices

gy y

46

Content development is accelerating

100m videos

135,000 apps

Facebook as a country...1. China

120m views in Dec 09

C a2. India3. X4. United States5. Indonesia6. Brazil

400m usersEasy sharing

47

My usage of devices is becoming more personal and more frequent

My usage of devices is becoming more personal and more frequent

My devices know me…

PERSONAL

Who I am...Wh t I lik

PERSONAL

Who I am...Wh t I likWhat I like...Who I like…What I like...Who I like…

LOCATIONLOCATION

Where I am...What is near me...Who is near me...

Where I am...What is near me...Who is near me...

WHAT I DO

Where I shop...

WHAT I DO

Where I shop...Where I eat...How I get there...Who I see...

Where I eat...How I get there...Who I see...What I want....!!!What I want....!!!

48

I use multiple devices each fit for purpose

I use multiple devices each fit for purpose

The technology revolution

New usage is driving new products and new sales

Existing technology is being updated more frequently to

respond to usage trendsrespond to usage trends

TVsNetbooks

Networking

Laptops

iPad

Tablets

PC (all-in-one)E-readers

ConnectivityA li ti

49

Applications

How the Connected World works

On the move3G subscription

At homeBroadband subscription

EverywhereNo subscription

SmartphonePCTV

LaptopiPad

TabletE-reader

“I t l “I want a connection for

Home Network

“I d ’t t t f

E readerNetbook

Handheld consoles

“I want an always on connection to be available

for voice and e-mail contact”

convenience, high bandwidth for media rich content and

multiple user access”

“I don’t want to pay for constant connection. I want

to dip in/dip out when it suits me, cost effectively”

50

Subsidised hardware Hardware choice

PC and Mobile are Converging

DesktopAs telecom and PC

hardware manufacturersAs telecom and PC

hardware manufacturers

Laptop1988

Desktop1976

hardware manufacturers compete for markets…

hardware manufacturers compete for markets…

Netbook2007The 5th

Screen

GSM MobilePDA1996

Smart Phone2000 …customers primary

consideration is …customers primary

consideration is Pager1956

GSM Mobile1991

1996 hardware choicehardware choice

5151

Market clearly sits with electrical retailers

Leading retailer of consumer computing and vision products in the UK

A leading retailer of connectivity options for customers in the UK

Digital ContentBroadband Connections

5252

Summary

• Technology cycle is stronger than everHardware Content

• Technology is part of peoples lives

• Content is increasingly personalising usageg y p g g

• Multiple devices for multiple uses

N d t id f t l t l• New products, wider ranges, faster replacement cycles

• Supplier relationships enable DSGi to have the widest range to meet customers needsrange to meet customers needs

DSGi i b t l d t l itDSGi i b t l d t l it

53

DSGi is best placed to exploit these trends

DSGi is best placed to exploit these trends

John BrowettJohn BrowettChief ExecutiveChief Executive

Summary

• Delivering Renewal & Transformation plan

• New format stores performing well

• Focus on Megastores and combined 2-in-1 stores

• In store and after sales services improving• In store and after sales services improving

• Multi-channel is major opportunity

• Costs down and stock turn up

• Exciting technology trends supported by increased g gy pp yreplacement cycles

• On track to achieve 3-4% return on sales

55

Strategy updateStrategy update19 March 201019 March 2010

Documents

Strategy updateStrategy update/media/Files/D/Dixon... · A leading European specialist electricals Group Country Share of sales+ UK & I 48% Nordics 24% Italy 8% Greece 5% Spain 2%