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Dixons Carphone was forced to close all UK stores from March 23. However, the retailer has used the lockdown period to accelerate its digital operations and build its online market share, while also leveraging the strengths of its in-store expertise. Chief Executive, Alex Baldock, believes that this combination will assert the business in a powerful position post-pandemic. Retail Week delves into Dixons’ digital operations, store closures and how retail is adapting to the new normal of shopping.

“We have significantly grown online” – Alex Baldock, Dixons Carphone

“We’ve done what we said we were going to do, which is to improve the range and make it easier to buy online, whether it’s better search and recommendations, checkouts or site speed, as well as making it easier for them to get a hold of their products once they’ve ordered.

“But it’s not just about online, it’s about stores too. We’re behind our big stores. We’ve invested tens of millions over the past year in remodelling 121 of our big stores. It’s online and stores together for us.”

ONLINE GROWTH

In the financial year through to May 2020, Dixons Carphone’s online sales rose 22% and climbed a record 166% in April year on year as lockdown kicked in and more shoppers turned to online.

With stores forced to close, Dixons “became a pureplay retailer overnight temporarily” and has succeeded in securing 70% of the lost store sales online.

Baldock had already anticipated that the shift to online is here to stay and hence was already taking Dixons Carphone in a more omnichannel direction as he says he is completely confident in that model.

“We do expect the shift online we’ve seen in many customers to continue after the crisis,” he says. “We do think this forced digital-first immersion that many have felt, whether it’s video conferencing or telemedicine or online shopping, will continue, and we expect these to all become enduring trends.”

“The reason we’re comfortable about that is, first of all, we’re winning online by gaining market share both online and in stores, and secondly we believe in our omnichannel model.”

“We believe that online and store services together are the right answer in the electricals category where 20% or less of customers are online-only.”

MARGINAL DIFFERENCES

Although online sales generate lower margins, the gap is quickly narrowing according to finance chief Jonny Mason.

Mason points to new elements such as the retailer’s ShopLive digital shopping platform and advice service, carried out over video by consumers speaking to in-store colleagues, as one example of how assets can be deployed differently to benefit the whole business rather than by taking a distinct channel view.

“If we’re paying for assets in a store, whether it’s the store itself or the colleagues in it, we’re finding ways to get more leverage out of that asset,” he says.

OMNICHANNEL SERVICES

During lockdown, Dixons Carphone has created a raft of new ways to supplement and complement their online channel, including ShopLive, which enables colleagues to virtually assist customers from the comfort and safety of their own homes.

Initially launching with 30 participating colleagues, ShopLive now has a whopping 280 experts on hand to talk to customers online. The retailer plans to quickly continue to scale up, given the success of this technological deployment.

ShopLive is currently conducting 20,000 online consultations a week with UK customers, helping drive the retailer’s omnichannel sales. Baldock confirms that customers using the service have both higher conversion rates and higher spend per head.

“Our pace of innovation accelerated due to the circumstances of lockdown,” explains Baldock, “but we’re placing bets that these services will become the new norm”

As the service leverages “the best of stores and online”, the cost of, for example, hiring a new store colleague seems more worthwhile as their reach goes beyond the store.

“We’ve learned a lot during this crisis and will emerge a better business from it,” he maintains.

Online in-store sales were already up 64% before COVID-19 hit and if Baldock is right, the pandemic, perversely, will have accelerated the move in an omnichannel direction that Dixons Carphone had already anticipated, and that seems to be proving popular with customers.

 

Full Retail Week article can be found here.

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