P16 MERCURY 1082 INDUCTION RANGE COOKER www.mercuryappliances.co.uk
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In and around the industry / / / / / / / / / / / / / / / / /
Spotlight on Samsung
Andy Griffiths and Colin Rodgers talk to Get Connected / / / / / / / / / / / / / / / / / / / /
The Product Gallery
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With the OFT about to report on the electrical extended warranties market, providers are preparing to square up for a hard competitive fight in 2012
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What consumer care about
Retailer loyalty, brand loyalty, price, service…? D&G shares insights into consumer attitudes gathered from its survey of a quarter of a million buyers of electrical goods in the UK / / / / / / / / / /
George Cole Gets Connected
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From the Bench
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GET CONNECTED XMAS-NY 2011/12
Marlinda Conway Editor in Chief
GET CONNECTED XMAS-NY 2011/12
few weeks ago I gave an afterdinner talk at a meeting of an independent electrical retailers’ and suppliers’ club.
I’d been asked to give an overview of the UK electrical industry, from the point of view of someone who, because of the Get Connected connection, has constant access to a very wide selection of facts, figures, opinions and experiences from people who are engaged in it as retailers, suppliers, distributors and service providers. In short, not as an “expert” – I would have had to turn that down – but as someone who listens to the people who are. I was fairly confident that I’d distilled a balanced view, from many sources, of what’s been happening in the electricals industry in 2011 and what might happen in 2012. But as I stood up to address the convivial company, which had dined well and become even more relaxed and sociable over a few drinks, I began to doubt my material. A few minutes in, an air of quiet – not to say sombre – introspection descended upon the room, and my doubts were confirmed. Having touched upon the state of the economy and its future prospects, the number of retail failures racked up during the year, the state of the UK’s High Streets, the difficulty of working on wafer-thin margins in many electricals categories, and the fact that an experienced electrical retailer such as Kesa was so uninspired by its assessment of the future of electrical retail in the UK that it was prepared to pay the thick end of £100 million just to get rid of the Comet business, I could see why the talk wasn’t going down a storm. I attempted to rescue the situation by pointing out that these were not my views or predictions: I was just the
compiler and conduit for the figures and views I’d gathered from the available sources. Then the company began to contribute ideas and arguments about what they had done, were doing and intended to do to maintain and improve their own businesses, and to goodhumouredly lampoon my air of gloomy concern. There was a lot of laughter, and it became clear that electrical retailers have an extraordinary fund of resilience, inventiveness, expertise, lateral thinking, business nous and sheer determination, and are committed to putting these qualities to use to find ways to survive and prosper. And this wasn’t blind, head-in-the-sand optimism. It was the measured realism of business people who had looked the “facts” in the face, fully understood the difficulties and set out to overcome them. They were saying to me: “we already know the problems, we live them every day, but we’re good at what we do and giving up is not an option.” So, in wishing everyone in the electrical industry a happy holiday season and a prosperous New Year, Get Connected Magazine would also like to thank the men and women of the East Midlands TRIC for lifting its publisher’s spirits and giving him a positive attitude to take back on the long drive home to Hampshire. Not everybody will have got all they wanted for Christmas, but 2012 is another year in which the UK public will need to buy stuff. If electrical retailers are allowed to have an influence on the way it goes, there will be a lot to be grateful for.
Terry Heath Editorial & Publishing Director
Will Dobson Creative Director
James McIntosh Consumer Consultant
Lynne Henry Communications Officer, GfK Marketing Services
George Cole Consumer Electronics Consultant
Average net circulation for the 12 issues distributed between Jan-Dec 2008 is 6,228
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THE WORD | INDUSTRY NEWS
Shop price inflation at lowest level in 12 months Shop price inflation is now at its lowest for a year, despite retailers having to cope with rising costs from suppliers and surging energy and distribution bills. The BRC-Nielsen Shop Price Index for November recorded overall inflation at 2%, down from 2.1% in October. Food inflation fell from 4.2% in the previous month to 4.0% in November, while non-food, at 0.8%, was unchanged.
Retail Sales show weakest growth since May The BRC-KPMG Retail Sales Monitor for
(internet, mail-order and phone) sales grew
November 2011 showed total retail sales up
8.6% – the weakest since March and half
by 0.7% compared to the same month last
the previous November’s increase.
year – the weakest growth since May and only a quarter of that achieved in November
Helen Dickinson, Head of Retail at KPMG, said: “Retailers’ performance is suffering
2010. Stripping out the effect of new retail
because of weak top-line growth and
space, like-for-like sales values were down
declining margins, making the backdrop
1.6% compared to November 2010.
even more challenging. December will
Non-food fell further below its year-
require some tough decisions for a number
earlier level, with sales largely promotion-
of retailers as they struggle to plot a path in
led, said the BRC, while non-food non-store
such challenging conditions.”
supports introduction of Internet tax Retailers hit by £350 retra Industry body retra says “an internet tax is long overdue,” and has backed calls for such to million business create a level playing field between bricks and mortar and online retailers. Chief executive Bryan Lovewell said the cut-priced nature of some internet players has had a rates blow detrimental effect on UK high streets and “retra would support a move in the UK to create a level
The BRC has spoken out against Government’s hampering of retailers’ ability to invest and create jobs, after the Department for Communities and Local Government confirmed the proposed 5.6% uplift in business rates. The increase is estimated to cost retailers an additional £350 million next year. Conventionally, the rate is uplifted each year by September’s RPI, which in 2011 stood at a 20-year high. The 5.6% rise comes into effect in April 2012, by which time the Bank of England’s central forecast expects inflation to be nearer 3%. BRC Director of Business and Regulation Tom Ironside said: “Retailers, who already pay 28% of all business rates, face another massive increase at a time when sales values are growing by barely 1%.” He added that retailers want to be in a position to grow their businesses, boost town centres and create jobs and renewed confidence, “but the Government’s unwillingness to consider a more limited increase makes it harder for the sector to make a greater contribution to the recovery.”
playing field and to recognise the investments made by independent retailers in staff training and well designed showrooms.”
Dixons Retail reports increased losses Dixons Retail plc reported an underlying pre-tax loss of £25.3 million for the 24 weeks to 15 October 2011, compared to losses of £6.9 million for the same period last year. The Group’s net debt has been reduced to £143.2 million from £215.1 million year on year, UK & Ireland gross margin was up 0.2%, market share is growing “across most markets, particularly in the UK,” and according to a Group survey, 71% of customers would now be “highly likely” to recommend the stores, compared with 43% a year ago. Although like-for-like sales in the UK & Ireland were down 5% in the 12 weeks, the rate of decline has been halved from the 10% reported in the previous quarter, and the Group is keen to emphasise that the three-year £150 million cost reduction programme is on track, with £60 million expected to be achieved in the current year. The company’s renewal and refit programme
is also, according to chief executive John Browett, continuing to have a positive effect on customer perception. More than 250 stores have already been refitted, and the drive to offer enhanced advice and service to customers is delivering improvements in market share. Browett said in a statement: “While we remain cautious about the economic outlook for the second half of the year, we are well positioned and remain focused on delivering world-class Value, Choice and Service for customers. We will continue to build our KNOWHOW service to further differentiate our offering.” Analysts were largely impressed by the performance but introduced a note of caution, pointing out that the overall specialist electrical retail market is suffering seriously from the economic downturn, and despite the “positive signs” from Dixons Retail, the Group is still “in a difficult place.”
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THE WORD | INDUSTRY NEWS
CI(H) maintains profit in poor retail year
“In another consecutive poor year in retail, our turnover is only marginally down, and this is with fewer members,” CI(H) chairman Robin Millwood (pictured) told his audience at the buying group’s annual Suppliers’ Lunch, held early December at the Dorchester in London. Mr Millwood thanked the suppliers who had supported the group in 2011, before reporting that the maintenance of turnover during 2011 had been achieved in a market place that in some areas is over 10% down, and added that “with more cost savings and streamlining we have managed to reduce the members’ costs as well as maintaining profit in the company.” The continuing CI(H) membership drive is proving successful, Millwood was able to report, “with more quality members having joined this year, several in the pipeline and numerous enquiries coming in every day. Interestingly,” he said, “there is still lots of interest from members from a rival buying group who are now realising that CIH/Euronics is the buying group to belong to.
“Our Blomberg exclusive Agency range has been extended to include built-in appliances, and with over 300 members now taking stock it is one of our fastest growing suppliers. “Our euronics.co.uk website is going from strength to strength, and with the national TV advertising is creating not only huge hit rates on the site but also directing the public to our 1,200 member retail outlets. Most suppliers have taken the opportunity to have their own supplier information pages on the website and with the new supplier lorry livery, the name Euronics is getting across to even more consumers.” CI(H) does not traditionally pull its punches, and while Mr Millwood was keen to give thanks and praise to suppliers where it was due, he also asked the gathering to note that “in a tough year we have to take note that there are some suppliers whose turnover with us has fallen off a cliff and do not appear bothered, while others have started to put in motion plans to stabilise the market, but we have not seen the effects of this yet and may not do so until 2012, if at all.
Cyber Monday: record online transactions for third year running Sage Pay, the UK’s leading online payment processor, reported record-breaking transaction volumes on Cyber Monday, the busiest online shopping day of the year
gifts for friends and family up £3 to £91. MD Simon Black said the growth of transactions year-on-year was huge: “Between 12pm and 2pm we recorded a
in the run-up to Christmas, as consumers
4.7% increase on last year, which is great
engaged in lunchtime spending sprees.
news for e-tailers. There was also a spike
Sage Pay said it processed hundreds of thousands of transactions, with growth up more than 17% on last year’s Cyber Monday and the spending average on
in transactions towards the end of the working day, at 4pm. “We’re expecting to break records all the way up to Christmas Eve,” he added.
“I can only reiterate that the members will continue to support those suppliers where a reasonable retail margin can be maintained. A couple of highlights must be in an area that we have not been traditionally strong: IT & Telecoms, where Micro-P is showing a 600% increase; and small appliances, where Magimix is showing a 47% increase.” CI(H) has this year made changes to its annual Awards, and has introduced a new Award named “The Supporter of the Independent.” The usual two Awards for brown goods and white goods suppliers of the year have been condensed to a single “Supplier of the Year.” The new Supporter of the Independents Award went to Rangemaster. “We looked at our suppliers,” said Mr Millwood on announcing the winner, “and it was obvious that some were making every effort to support the members whether it was in displays, product design, availability, but most importantly where the member can make a margin – and not just occasionally but regularly. This supplier has beavered away making an enormous range in every colour under the sun and has consistently year-on-year increased its turnover with us and is currently showing a 16% increase on the moving annual turnover.” The Supplier of the Year Award went to Siemens. “Over the year,” said Mr Millwood, “this supplier has consistently been top of our member polls for the supplier they are happy with for support, product range, promotions, innovations, customer service and, most importantly in a tough trading environment, the ability to make a profit.” The lunch also marked the departure of Alan Carter from the BSH Group after 25 years. “I am glad to say,” said Mr Millwood, “that CIH/ Euronics also grew to be one of BSH’s largest accounts.” Alan Carter was presented with a “signed exclusive Arsenal shirt.”
THE WORD | INDUSTRY NEWS
Haier’s AFD626TG MyZone fridge freezer gained a Which? ‘Best Buy’ after the consumer body awarded the appliance Five-star ratings for freezer power, uniform fridge temperature, fridge and freezer temperature stability, ease of defrosting, quietness and vibration. Belling declared its sponsorship of this year’s BBC Good Food Shows a success after a record number of visitors (235,000) was recorded. The brand was the exclusive Kitchen Appliance Supplier to all of this year’s 2011 Good Food events, equipping the kitchens and live demonstration theatres of the shows.
and floors, along with Rangemaster’s wide collection of cooker colours and styles. The Zanussi ZCV661MWC Freestanding Cooker, ZQF6114A Freezer and ZVE6004F Hob have been awarded Which? Best Buy status. The ZQF6114A Freezer also gained a Which? ‘Energy Saver’. John Lewis has won The Marketing Society’s ‘Brand of the Year’ accolade for a second year in a row. The retailer was chosen to receive the award by more than 21,000 marketers and members of the public, from a shortlist of four other finalists.
Domestic & General has appointed Kam Kandola to the newly created post of Business Development Director. He joins from The Warranty Group, where he had been Business Development Director. In a further move, D&G announced the promotion of Group Marketing Director Mark Berryman to Executive Director of Domestic and General Group Holdings and member of the Group Board. Beko has enlisted TV presenter Kirsty Gallacher to back its nationwide Beko Mums United campaign which aims to engage mums in their children’s sporting activities. The initiative is part of Beko’s activity to raise consumer awareness of the brand and its products.
Rangemaster has developed custom-built software to help customers visualise how their choice of range cooker would work within their broader kitchen planning scheme. Logging onto www.rangemaster. co.uk/virtualkitchens.aspx opens up a world of virtual colours and finishes for kitchen cabinetry, wall colours, worktops
Indesit Company has appointed Piero Pracchi to the role of Indesit Brand Director for the UK and Ireland to replace Ian Moverley, who took up the position of Hotpoint Brand Director earlier this year.
SEBO has strengthened its sales team with the appointment of two new representatives: Craig Turns, responsible for the North East of England and Scotland, and Denise Fox, whose area covers the Midlands, Wales and Northern Ireland. Kevin Hockney, who has been with SEBO for five years, has recently been promoted to National Sales Manager, reporting directly to Sales Director Justin Binks. De’Longhi has taken its first concession in the UK in a 24 square metre space located in Harrods’ new Tea and Coffee Room. The retail outlet, based on the second floor of the department store, displays a variety of the Italian brand’s finest bean-to-cup coffee machines and bestselling ranges of kettles and toasters. D&G has announced that, after enjoying considerable success in Italy and UK, Indesit Company has agreed to extend its product protection services to additional markets across Europe. The 3-year agreement gives D&G exclusive rights to provide warranty products for around 3.5 million products. Beko has appointed Mike Hobbs to the role of National Account Manager for the multiple channel and Tracy McKernan as Regional Sales Manager with the independent team, responsible for Scotland, the North East and part of the North West.
as Toshiba, Samsung, Kenwood and
in-store electrical offer with the rollout of
Morphy Richards. The new range will
prices, another key advantage is that the in-
a new-look concept to 32 stores prior to
include “everything from headphones to
store electrical shops will be open during
Christmas. The revamp and expansion of
HD televisions and coffee makers to food
the same trading hours as the food stores,
in-store electrical displays, which offer
unlike most traditional electrical stores,
top brands at internet prices, follows a
“As well as offering top brands at internet
Sean Toal, acting chief executive at
making it much easier for consumers to
successful pilot at five Co-operative Food
The Co-operative Food, commented: “The
find and buy what they want and when
stores, which saw electrical sales increase
pilots have been a great success and the
they want it.”
new-look electrical offer will complement
The new concept will be introduced to a
and enhance our customers’ existing food
further 33 stores with an existing electrical
shopping experience in these stores.
offer in the New Year.
More than 100 items will now be available in-store from brands such
The Co-operative Food has expanded its
Co-op Food adds to electricals offer
THE WORD | INDUSTRY NEWS
TRIC outpost welcomes GC Last month Get Connected was invited to speak at a meeting of TRIC East Midlands on “The state of the electrical industry.” An invitation that we were pleased to accept, not only because it’s always useful to meet retailers on the front line in the hard battle for sales and margins during what are, for many, the most difficult trading conditions in living memory, but also because the East Midlands group claims to be “the last remaining TRIC in the land (except the wonderful charitable fund raising TRIC in London”). TRIC (the Television and Radio Industries Club) was formed to give support to all involved in those industries, and over the years has raised huge amounts for charitable causes. The East Midlands TRIC, we were told, has “migrated towards mostly retailers and supporting industries, whereas in London members are mostly on TV rather than selling TVs.” The evening meetings feature a speaker, often but not exclusively with connections to the industry, and “the talks are very enlightening, but also the chat in the bar before and afterwards is both comforting and reassuring. When you live behind your
counter it’s very easy to become detached from the real world outside. At TRIC you have a chance to ask that nagging question, or compare notes on a problem you have had, for example, with one brand of TV.” Unfortunately, GC’s presentation of a “roundup” of the state of the industry, culled from all its industry sources, did not appear to offer the meeting much to be optimistic about, but the resilience and resourcefulness of electrical retailers is still a heartening and encouraging environment to be in, and gives hope that they will find ways to survive and prosper. TRIC East Midlands meets on the third Thursday of each month with a short break at Christmas and a longer break in Summer, and the chairman extended this invitation: “If any dealer, installer or associated trades person is reading this and within reach of Kegworth, Leicestershire on a Thursday night, drop me a line and I will send you meeting details and a very warm welcome.” The email address is email@example.com. Alternatively, the regional TRIC groups seem to be so beneficial to members that it could be worth setting one up where you are.
See the stories behind the news at www.gcmagazine.co.uk…
Electrolux Design Lab announces 2012 theme
‘Design Experience’ challenges entrants to “stimulate all senses” Hoover reaffirms support for Aristocrat range
CI(H) exclusive range offers “full and sensible” margins for independents Indesit Company performs again for Children in Need
Employees raise record amount of money Lloyds Bank promises £12 billion new lending to small businesses
“At least £12 billion” earmarked for SMEs in 2012, says Lloyds Government to consider easing of unfair dismissal rules
Small businesses could find it easier to dismiss staff
Energy Saving Trust awarded charitable status
John Lewis announced as founding partner AEG appliances installed in new carbon neutral homes
Eco building project goes live in 2012 Dyson funds Cambridge University professorship
£1.4 million deal to support “breakthrough engineering and scientific research”
Digital radio connects with UK consumers Digital Radio UK has announced a £10 million investment in the first connected consumer campaign to promote digital radio. The industrywide initiative, developed in conjunction with the BBC, is the start of a two-year drive to increase digital listening and will run across BBC TV and radio stations, commercial radio, in the Guardian and Observer, Bauer magazines and online. The campaign, which commenced early December, uses a consistent endline – ‘If you love radio, let it live’ and is accompanied by a new digital radio ‘pulse’ logo, which has been adopted by major manufacturers and retailers who will use it in their own communications and point-of-sale materials. Let it Live will have three major phases of activity in 2012 – spring, summer (focusing on the Olympics, the Euros and festivals) and Christmas – and will run through to mid 2013 when Government is expected to make a decision on digital radio switchover. It aims to accelerate listening growth to help achieve a target of 50% of digital listening by end 2015. “2012 is a big year for digital,” commented Ford Ennals, Chief Executive of Digital Radio UK. “The first truly digital Olympics, completion of the digital TV switchover, and the coming of age of digital radio with the first industry connected communications campaign as well as more digital stations, more digital radios in-car and better digital coverage.” Tim Davie, the BBC’s Director of Audio and Music, added: "The industry is working together to drive digital radio and, alongside agreeing a co-ordinated strategy, improving coverage and investing in new content, creating stronger, clearer promotion will play an important role in making sure listeners understand the benefits of digital radio."
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THE WORD | INDUSTRY NEWS
100 years of Whirlpool Whirlpool held a series of events around the world throughout 2011 to commemorate the company’s 100th anniversary. Amongst the events were an Employee Day, a Family Day, a classic tea party on 11th November, the date of the company’s anniversary, and a celebration lunch for trade media, prepared by Tim Anderson, the winner of MasterChef 2011. Commenting on the “tremendously busy, exciting year,” Juliana Sado, Brand Marketing Manager, said: “The anniversary celebrations have been a great way to commemorate the company’s provenance and its ongoing mission dedicated to improving the lives of consumers in every home, every where.”
Britain’s Best Dish Sky roadshows a success chef endorses Hoover oven DirekTek Distribution highlights Canon projection
Imaging specialist distributor DirekTek believes the Canon LV Projector range offers retailers and consumers an outstanding deal and claims it to be the projector range with “the lowest cost of ownership on the market.” All six models – LV 7290, 7295, 7390, 7490, 8225 and 8320 (pictured) – are covered by a 3-year warranty which means that “for the first 3 years of ownership, no maintenance will have to be carried out.” In addition, a 3-year lamp warranty covering up to 3 replacements over the warranty period means up to 24,000 hours of lamp life is insured against the average lamp replacement cost of £200. The range is compatible with PCs, digital cameras, video decks and DVD players, and has the benefit of an eco-friendly addition which emits reduced levels of CO2 in ‘Eco mode’, and consumes less than 1W of power in standby mode. Extra features such as Automatic Keystone Correction, up to 5500 hour air filter life, Auto Iris functionality (which matches the projected light volume with the brightness of the screen), and Auto Input Search and Guidance Functions for simple out-of-the-box setup, offer retailers a versatile range that can be pitched at homes, businesses or education establishments. Contact DirekTek on 01494 471100.
A chef on Britain’s Best Dish has declared the Hoover HOP 4075 electric multi-function oven with vision LED lighting “as good as a professional oven”, after producing pork crackling that tasted “as good as his nan’s.” Professional chef Lawrence Keogh’s roast pork dinner recipe has been posted to Hoover’s Best Dish Facebook page, where people have a chance to win one of the built-in ovens along with a 5 burner gas hob and black freestanding dishwasher. Three runners up will receive a dishwasher.
Fagor to conquer new territory Fagor has launched a ‘teaser’ advertising campaign promoting its intention to “conquer new territory” with a “completely
Sky has declared its series of autumn roadshows a success after it attracted a number of potential new partners to join its network of independents and received positive feedback from existing partners on its new strategy and support initiatives. The broadcaster is aiming to build a network of 300 authorised independent retailers throughout the UK. The roadshows gave retailers the opportunity to find out about new point-of-sale materials and Sky exclusive promotions, as well as the chance to benefit from advice on areas such as making the most of their database, training staff, and maximising profits. The POS package options include blade signs, a pavement sign and a demo and window unit. Barry Shuter, national sales controller of Sky Independents, said: “I am confident that we can increase the sales through the independents – this is the time to really grab it with both hands to get your fair share of the market. “Sky will actively drive sales into your business by increased marketing support,” he said. “We are looking to clearly establish independents as ‘Your local Sky expert’.”
new and revolutionary” product which, according to the brand, represents an exciting new sales opportunity for retailers. The product takes its name from the first satellite launched into the earth’s orbit and is designed to pay homage to the 20th Century space age. SPOUTNIK (the French translation of Sputnik) will be unveiled to UK retailers W/C 16 January 2012.
Haier continues UK expansion Haier has conducted the official opening of its new offices at Westgate House in Ealing, which are located 200 yards from Hanger Lane underground station. The 353m² offices and improved product showroom are said to facilitate access for trade customers and ensure that the brand has adequate room for expansion in the future. “The move from Godalming to Ealing, which gives us three times more space, clearly reflects our continued determination to consolidate and grow the Haier brand in the UK,” commented Sales and Marketing Director Jeff Moody. Moody said the move was “a natural step” following the opening of the company’s UK warehouse earlier this year.
The perfect blend? De’Longhi and NESCAFÉ® DOLCE GUSTO® have announced a new partnership deal to launch a range of De’Longhi-branded NESCAFÉ® DOLCE GUSTO® pod coffee machines in response to the growing popularity of pod appliances, which are currently driving strong growth in the £69 million UK domestic coffee machine market. The units will come in a variety of colours and are said to be compact, easy to use and of high quality, with a range of widely available coffee pods. Kate Donohoe, Brand Manager for De’Longhi UK, said: “We’re confident that our number one market position, expertise and distribution network will ensure a successful launch and result in significant incremental sales of pod coffee machines here in the UK.”
BSH introduces TEQ Award POS BSH Customer Service is highlighting its recent TEQ Award win at point of sale with a range of promotional material, after winning the prestigious Award for the Best Customer Service in UK white goods for the third time in a row. The POS items carry the tag line ‘Best Customer Service – As voted for by customers’ together with the TEQ Award winner’s logo and are designed to be placed
on all Neff, Siemens and Bosch home appliances. BSH Customer Service Marketing Manager Neil Whitwell said: “With this flexible new point of sale material our dealers will be able to initiate a conversation about the long term importance of customer service throughout the lifetime of the appliance and give customers yet another valid reason to purchase a Bosch, Neff or Siemens model.”
GDHA supports Barretts open evening More than 200 customers attended Canterbury retailer Barretts Digital World’s annual open evening, which this year raised £350 for a local branch of the NSPCC with the assistance of celebrity chef Brian Turner, who treated his instore audience to a cookery master class. Master Baker and star of ‘The Great British Bake Off ’ Paul Hollywood, who lives locally, also made an appearance at the event.
Blomberg launches built-in in the UK Blomberg, which launched its freestanding appliances in the UK in May 2010 through an exclusive relationship with buying group CI(H), has extended its MDA offering with a collection of built-in cooking, laundry, dishwasher and cooling appliances. The new range incorporates advanced technological features and fresh design, and is, says Blomberg, targeted at “style-conscious consumers looking for high quality appliances.” Teresa Arbuckle, Marketing Director at Beko PLC, said: “Following a strong start for the brand in the UK we are delighted to be extending our Blomberg offering with this new range of premium built-in products. “Blomberg has a fantastic worldwide reputation and guaranteed performance, making a welcome addition to any kitchen. We are looking forward to continuing to cement this reputation in the UK.”
The latest technology, free 5 year Guarantee, gorgeous designs. Please contact us on 0845 555 1101 and find out why Linsar is The British brand for the independent dealer.
Plug, Play, Record Live TV functions (via USB). Free USB key for all registered products*. *Terms and Conditions apply - see www.linsar.com for details
THE WORD | INDUSTRY NEWS
A snapshot of opinion on
The Portas Report
The long-awaited Mary Portas High Street report, released 13 December, was broadly welcomed by businesses at the centre of retailing, although some considered the document to hold little new in the way of revitalising measures that had not already been put to the Government in the past. Ms Portas made 28 major recommendations, which include making it easier for traders to set up market stalls, reduction in local parking charges, plans for a national market day and relaxation of regulations imposed on High Street traders. However, the thorny issue of out-of-town developments, which draw footfall from traditional High Streets, did not lead her to support the call by some business groups for a moratorium on the creation of new out-of-town shopping centres. The BRC’s Richard Dodd said the Report had a “good number of sensible ideas. Clearly a national market day is never going to be the sole solution but alongside a range of other measures it could make a useful contribution to generate interest and stimulate shop numbers, adding to the originality and distinctiveness of particular town centres.” Director General Stephen Robertson said the sentiment, and many of the proposals, were in line with the organisation’s own High Street rescue plan, 21st Century High Streets. “We absolutely agree that High Streets make a unique contribution to local neighbourhoods and economies,” he said. “Prioritising action on Business Rates and parking is exactly right. These are the key concerns for customers and retailers. We agree, it would be ‘too easy’ to blame out-of-town retailing for the decline of our high streets. This plan should be about supporting a rich mix of retailing, not striking dividing lines between big names and independents or town centre and others. “Mary Portas is right to reject a moratorium on non-town centre development. At a time when economic growth is the nation’s key priority, this would have been damaging. But we are concerned that introducing a ‘Secretary of State exceptional sign off ’ for all new out-of-town development and requiring an ‘affordable shops’ quota is unnecessarily restrictive and could tip the balance against some new developments being built. “We back ‘free controlled parking schemes’ and we’re very interested in the idea of a new parking costs league table,” added Robertson. “We would though be very concerned at any proposal which sought to penalise parking out-of-town. Free parking benefits customers. We should be levelling up the appeal of retail locations of all types.” Landlords welcomed a key recommendation from Portas that would free them to deliver significant extra
investment in the nation’s problem High Streets. The British Property Federation (BPF) urged ministers to accept one of the Review’s central findings that would enable landlords to become High Street investors by allowing them to contribute to Business Improvement Districts (BIDs). BPF chief executive Liz Peace said: “BIDs are the embodiment of the ‘big society’, with local businesses giving time and money, often voluntarily, to make their High Street a bit special. We are therefore delighted to see Mary recommending greater landlord involvement in BIDs, and also suggesting how they can be further enhanced with new powers such as on planning.” The BPF also welcomed the emphasis on building greater ties between landlords and tenants, which it said the best landlords already excel at; its call to support the Leasing Code, and the use of lease structures other than upward only rent reviews. But, like the BRC, questioned the wisdom of giving the Secretary of State “exceptional sign off ” for new out-oftown schemes, and for all new developments to have an “affordable shops” quota. Jacqui Joyce, head of retail at law firm Thomas Eggar, concurred with other commentators that much of what Portas outlined in her Review “makes absolute sense for retail and clearly something radical needs to be done to bring life back into our high streets and support local retailers.” But she added that “the proposals requiring large retailers to mentor and support their smaller competitors and include such activities in their annual report may prove unrealistic and are likely to be unpopular. Many large retailers are themselves struggling in the high street (and elsewhere) and in many cases need to focus their undivided attention on their own business to stay competitive or, in many cases, afloat.” Carl Dyer, head of Thomas Eggar’s planning team, also felt that some of the recommendations in the Review will be of concern to some of the UK’s larger retailers: “There are some good ideas here, building on existing best practice, but also some questionable ones,” he said. “The proposal to put a presumption in favour of Town Centre Development into the National Policy Planning Framework (NPPF) would be fine, but both existing planning policy and the draft NPPF already favour town centre retailing; the implied corollary that edge-of-centre and out-of-centre retailing should be made even harder to achieve is not. Sometimes there are simply no town centre sites available, and the only way to deliver competition and the benefits of modern retailing is to go out of centre.”
One of the most widely supported Portas recommendations was the changing of business rate inflation from RPI to CPI. The BPF’s Liz Peace said: “Retailers need more certainty on business rates and have had a bad deal with the link to the RPI over the past 20 years. Moving to CPI is a step in the right direction, though for absolute certainty we recommended a fixed uplift of, say, the inflation target, which lets everyone know where they stand in advance and would cut administration.” “We’re delighted Mary Portas has not ignored the impact of massive business rates bills on existing retailers,” commented the BRC’s Robertson. “Achieving a rates system that produces increases that are more affordable and predictable is crucial.” “Mary Portas has rightly said that we can’t turn back the retailing clock,” commented Thomas Eggar’s Carl Dyer in his concluding remarks. “The world has changed. Our habits have changed. If High Streets are to survive they need to evolve to meet the demands of modern consumers. Her report has some sensible proposals for positively improving the High Streets. However, it has arguably taken some unnecessary and potentially damaging swipes at the UK’s most successful retailers and the most popular shopping formats. “The Government has already promised a measured consideration of this report. When they respond to it, they will hopefully adopt only the proposals that aim positively to enhance the High Streets, and reject some of the less well conceived alterations to the planning system.” Prime Minister David Cameron said the Government will review Portas’s recommendations and publish its response next spring.
SPOTLIGHT ON SAMSUNG
Design, innovation and drive: Samsung is poised to enter 2012 “with a smile.” GC reports
amsung’s new showroom at its Chertsey headquarters is everything one would expect from a brand which claims strong design values as a feature of its DNA. Pod-like structures provide a sense of cosmos, where SAMSUNG’S ANDY GRIFFITHS LEFT AND COLIN RODGERS: GOING PLACES IN 2012… integration brings products together to form the vision of 21st Century living. The focus: connectivity. The nucleus: Smart TV, intelligently interfaced with the brand’s Galaxy products to create a new universe in which consumers can Watch, Chat, Share and Surf – the four pillars upon which the Korean manufacturer’s market, and while 3D created an immediate burst of innovative system, designed to bring TV to the Griffiths also remarks that, amongst the big TV brands, interest, it is widely accepted that watching the format centre of the home, is based. Samsung products are the most expensive in the market. is very much an ‘event’ rather than an everyday viewing Whether viewing movies, accessing videos or But, in order to sell premium priced products, brand experience. Smart TV, on the other hand, has changed games, watching on-demand TV, indulging in social experience areas and the creation of a sense of theatre the way consumers think and interact with their TV sets. media, surfing the web or even making video calls in-store are essential. It’s no surprise, then, that the main For Samsung, the category has proved highly successful. via Skype, it’s all about interface and content. But as channels for Smart TV tend to be the indies, multiples, and Andy Griffiths, Vice President of store chains such as John Lewis: Consumer Electronics at Samsung “Retailers who demonstrate UK, points out: content needs products and who offer an “Value-added retailers will see a revival” to be organised. “It needs to be assisted, well merchandised sale. accessible, not overwhelming,” he “The specialist retailer Organised content, breadth of connectivity and the tells GC. “We need to be concerned with how consumers is in strongest place to deliver technology,” Griffiths ultra-thin design of its flagship products have resulted engage with products.” As you’d expect from a master adds, noting that his brand has a 30% share of the in the brand holding 55% of the Smart TV category, smartphone and tablet manufacturer, apps are at the independent market and, despite the recent turmoil in 50% of the £1,500+ price bracket and 40% of the core of Samsung’s Smart TV products, and Colin Rodgers, the big box sector, “the multiples are getting better.” overall TV market. General Manager, Independents, asserts that it is the It’s been a tough time on the whole for specialist While Samsung continues to maintain a young brand’s strength in sectors such as those above that retailers: the rise of the internet and varying mass audience which is growing with it, its appeal has makes it “best placed” in the area of connectivity. merchant channels having dined liberally at the table expanded to encompass a wider demographic. Griffiths Samsung’s mission has been (and is) to bring quality of the once powerhouse of electricals – eating into puts this, in part, down to ‘word of mouth’. “It’s a given product and “something different” to the market, says margins and consuming market share – and a biting that Samsung TVs are the best,” he contends. “Standout Griffiths, and it’s been a good year for the brand. “We’ve recession which saw the demise of many businesses, product equals brand recognition. Consumers are been encouraged by the success of Smart TV. It established the good as well as the bad. But while Griffiths is of the very demanding and you’ve got to have a very strong itself quickly and has had a big impact on the market.” opinion that “we need a better market” and some may product proposition to demand their money. People are There’s no doubt that the TV sector needed well have to “rediscover their retailing skills,” he firmly looking for more than a TV.” something new to encourage consumers back into the believes that value-added retailers will see a revival. An earlier comment made by Colin Rodgers endorses Griffiths’ overall view: “There are nine different add-ons SAMSUNG’S NEW CHERTSEY SHOWROOM to TV – retailers have got to sell smart.” In 2012, Samsung will expand its premium range of AV Elite products and is poised to make greater inroads in White Goods in partnership with celebrity chef Jamie Oliver, who takes on the role of brand ambassador. White Goods is currently Samsung’s fastest growing sector, in which it holds the No.1 position for side-byside refrigeration. Looking back on the past few years, the everoptimistic Griffiths states with candour: “It’s been tough. The recession has made us all work harder.” As for the future: “We can go into next year with a smile,” he says, his face reflecting the words.
GET CONNECTED XMAS-NY 2011/12
Whirlpool limited edition MAX microwave oven The Whirlpool MAX corner microwave has been released in a range of new metallic tones to mark the company’s 100th anniversary. The “flagship” product is available in Caffeine, Platinum Bronze and Moonlight with mirrored glass door and an LED ambient lighting system with white, green, red and blue lights each representing a different cooking function and reflecting onto the surface below. 0208 649 5000
Accommodates 28cm dinner plates
6th Sense Crisp technology / 6th Sense Crisp Defrost (defrosts and warms bread) / 6th Sense Jet Defrost
3D Microwave Distribution System / Quartz Grill
Smart-touch electronic controls with text assisted display
Dimplex Chevalier fire Dimplex’s Chevalier fire sports a creamy-white gloss finish and the brand’s awardwinning Optiflame technology. The contemporary design gives the appearance of a substantial wood burning stove with picture-window doors opening to fully reveal the flickering flames. gg
Concealed 2kW fan heater with thermostatic controls
Supplied with real coals and log effect fuel beds
Manual or remote control operation
Flame effects independent of heat
0845 601 5111 www.dimplex.co.uk
Panasonic LUMIX GX1 camera The Panasonic LUMIX GX1 is an interchangeable lens camera small enough to fit into a jacket pocket. The unit weighs just 413g and is available in Gunmetal Grey or Raven Black with a sturdy aluminium chassis. gg
16.0-megapixel image sensor / Venus Engine image processor
Automatic shooting modes
AF speed 0.09 seconds / Burst Shooting speed up to 20 FPS
Choice of 14 interchangeable lenses
Large LCD touch screen
Records in Full HD AVCHD 1920 x 1080, 50i, with stereo sound
0844 844 3852
GET CONNECTED XMAS-NY 2011/12
Mercury 1082 induction range cooker
The new Mercury 1082 induction model brings a new 1082mm width to the range, so products are now available in four sizes (1000, 1082, 1100 and 1200). The contemporary styled cooker is available in Blueberry, Purple Haze, Truffle, Oyster, Snowdrop, Liquorice, Stainless Steel and Ash Black. RRP from £4,653. gg
Multifunction oven with seven settings (left)
81-litre capacity fan oven (right)
Rollout grill with four cooking positions
Induction hob with 1-9 power settings / Power boost function
0115 946 4000
THE PRODUCT GALLERY
Fujifilm X-S1 camera The Fujifilm X series of premium cameras is being extended to include the X-S1, which is due for UK launch in February 2012. The model is a new breed of bridge camera featuring a Fujinon 26x optical zoom lens and 12 megapixel EXR CMOS sensor. gg
Up to 10 frames-per-second shooting / Optical image stabilisation
Large EVF with 1.44 million pixels and 26 degree viewing angle
Roberts Record digital radio
Tilting 3-inch rear LCD with ‘Sunny Day’ mode
Full HD video / 360° Motion Panorama mode / Macro focusing down to 1cm
The RecordЯ from Roberts Radio is a DAB/ FM RDS digital unit with one-touch record function, providing manual recording from live FM and DAB radio direct to SD card. Users simply need to insert an SD or SDHC card in to the side of the unit, press and hold the PausePlus button to record for up 24 hours or pause 60 minutes of live airtime.
Lithium battery providing up to 500 shots per charge
0844 553 2322
Haier 86 Series washing machine Haier is to launch a new range of washing machines featuring a seal and detergent drawer with the brand’s ABT treatment, which destroys bacteria throughout the machine’s lifecycle. The 86 Series offers an 8kg capacity and will be available January 2012. An 82 series will follow in April 2012, with capacities ranging from 6 to 9kg. Flagship 86 Series model HW80-B1486 features:
Set the radio in advance to record up to four different programmes
FM RDS station name display / 10 station presets
Alarm with four settings / Sleep function / Nap timer
A+++AB class efficiency / 0.9 kWh energy consumption
Line in socket for iPod/MP3 playback / Headphone socket
Automatic Variable Capacity function alters consumption automatically
Battery or mains operation
Induction motor provides low noise levels
11 pre-recorded programmes / Memo function
30 minute to 24 hour time delay function
01709 571 722 www.robertsradio.co.uk
0208 166 4978 www.haier.com/uk
PURE Contour 100Di digital radio dock PURE’s Contour 100Di is a compact revolving dock for iPod, iPhone and iPad, with integrated digital radio, powerful audio, free companion internet radio and music streaming App (available now to iPhone, iPod Touch and iPad users). The model has a suggested retail price of £99.99. gg
Two alarms / Sleep and snooze timers
Made for iPod and iPhone certification
Aux-input / headphone socket
Slim-line remote with magnetic remote tidy
ATAG has launched a 17-place setting, AAArated integrated dishwasher with four baskets and 9.9-litre water consumption. The unit has three power zones with a ten-zone spray system and is equipped with electronic sensors that automatically adjust the programme setting for minimum resource usage. ‘Easymatic’ handles provide quick adjustment of the top rack to allow extra room to stack larger items underneath. 0208 247 3993
Noise level 43dB(A)
Separate movable cutlery baskets
6 temperatures and 12 programmes / Half load and Delay Start options
Turbo drying system
2-year parts and labour guarantee, automatically increased to 5 years when purchased with three or more other ATAG products
GET CONNECTED XMAS-NY 2011/12
ATAG XXL dishwasher
0845 1489001 www.pure.com
he electrical warranties market in the UK promises to be a more lively and competitive place in 2012, as more potential providers make decisive moves to take a piece of the action and impress retailers with their credentials, products and service. The UK market in extended warranties for domestic electrical goods is worth well over £750 million, and it appears that, in anticipation of the OFT’s conclusions from its ongoing market study on the competitiveness and value of extended electrical warranties, more providers are positioning themselves to take a share.What does this mean for electrical retailers into 2012? Get Connected spoke to some of the established providers and some of the more recent entrants.
GET CONNECTED XMAS-NY 2011/12
In the second half of 2011, there has been a marked upsurge of activity from warranty providers and potential new entrants in the UK market. There seems to be a growing belief that consumer caution in financially straitened times will favour the uptake of prudently purchased extended warranties; and also a conviction that the OFT’s market study might come up with conclusions and recommendations that will encourage more choice and competition.
Major moves The market is seen to be ripe for more competition, and the recent launch in the UK of the largest independent warranty provider in the US, SquareTrade, promising to “shake up” the warranties market with “better value, customer service and more consumer choice,” is a high-profile declaration of intent. UK Warranty, UK General Insurance Ltd.’s entry in the field, is currently undertaking a campaign to increase its presence and profile in the Trade, and UK Warranty Director Kevin
Brown told GC: “The business is dominated by a couple of suppliers, but to be fair, UK Warranty wants to provide an alternative, focused on competitive pricing and excellent after sales.” Meanwhile, Insurance and warranties provider Assurant Solutions has strengthened its sales team in the UK and Ireland with three new appointments: a business development manager; a client services manager and a new marketing executive. Business development manager Steve Case will be focusing on the UK’s extended warranty business, and commented: “Assurant Solutions has years of experience in providing warranty solutions to retailers around the world. I look forward to creating new opportunities to support our partners in growing their business by providing product innovation and excellent customer service.” Long-established warranties provider Domestic and General has created the new post of Business Development Director and filled it with former Business Development Director of The Warranty Group Kam Kandola,
who will, according to D&G, be “working on a number of new business-to-business projects across all business sectors.” “The move,” adds D&G Sales Director Derek Hollingdale, “continues to strengthen our senior sales team as we further build on our working relationships with manufacturers and service providers across the industry.”
play out. Consumers are increasingly finding out about products and services from social networks, online forums and review sites, and so they are more empowered to choose warranties based on peer recommendations rather than a sales pitch. Warranty providers need to take this on board as well as the advice in the OFT report, otherwise the market could see a real drop in 2012.”
Good timing? With warranty providers making positive – even aggressive – moves to strengthen their profiles and their sales teams for 2012, it’s clear that they’re gearing up for what they believe will be a period of hotter competition in the warranties sector of the UK electricals market. Why now? The imminent OFT report on electrical goods warranties may have something to do with it. This, coupled with a perceived shift in consumer purchasing habits in favour of “peace of mind”, and further research by providers that indicates the market needs to rehabilitate its image, has created an environment that, in the judgment of providers, is favourable to decisive action. This is borne out by feedback from providers, though their research findings don’t always produce the same interpretation. For example, SquareTrade says its research revealed that “UK consumers have lost their faith in the warranty industry.” Two thirds of respondents said they don’t trust warranty companies to pay out, 31% said their provider had failed to pay out after a claim, and 61% said they felt warranties were “a waste of money and poor value.” SquareTrade MD Vince Tseng sees the company’s survey of UK consumers as a clear signal that the market is ready for more competition. “We’re not
SIMON HARRISON, SALES DIRECTOR UK & IRELAND, ASSURANT SOLUTIONS
Another view For Simon Harrison, Sales Director, UK & Ireland at Assurant Solutions, research has revealed that warranties can have a positive image with consumers. He told GC: “We conducted research back in April to find out what consumers thought about extended warranties so that we could ensure our products were meeting their needs and that we were providing our retail partners with the right product for their customers. It’s clear that consumers do appreciate their value. Over half said that they bought a protection plan because it gave them peace of mind.
remotely surprised by the survey results,” says Tseng, “but it’s exactly why we’re launching SquareTrade here. In virtually any other financially regulated product, you’d expect more choice, value and good customer service, so why should you expect less when buying a warranty?” Tseng is also anticipating that the OFT’s findings will favour competition. “The upcoming OFT report on the sale of warranties,” he told GC, “may play an important role in how warranties are sold in 2012. The OFT has expressed a desire for more competition to be introduced and better value to be offered to consumers, and it remains to be seen how the enforcement of this will
“Our research found that only 38% of the population has an extended warranty. This represents a tremendous opportunity for retailers to improve penetration rates. I Think the current economic climate is causing a lot of people to think more carefully about the goods they buy and how they would be able to afford to repair or replace them if something went wrong. And it’s clear from our research that retailers remain the trusted source when it comes to purchasing an extended warranty. Two thirds of respondents told us that they bought the insurance from the retailer – either in store, by telephone or online – and when asked why, a quarter said it was because they knew and trusted the retailer.”
GET CONNECTED XMAS-NY 2011/12
“Only 38% of the population has an extended warranty ...a tremendous opportunity for retailers”
“The upcoming OFT report on the sale of warranties may play an important role in how warranties are sold in 2012”
NIGEL WILKINSON, DOMESTIC & GENERAL’S DIRECTOR OF CLIENT RELATIONSHIPS
value to many of our warranty services with benefits such as accidental damage protection and no ‘excess’ to pay on repairs. This service-oriented business model delivers real value to our clients and their customers, now and into the future. Domestic & General has been in this market for six decades, has 11 million active customers across its markets and will be delivering a service-led value warranty proposition long into the future.”
GET CONNECTED XMAS-NY 2011/12
The retailer/warranty provider relationship
UK Warranty director Kevin Brown observes that “there’s been a general increase in market activity over the last 12-24 months. Customers are returning to warranties because they want security. Fewer anticipate changing appliances every 2, 3 or 4 years. ‘Large projects’ have stalled, so product replacement has come to the fore, and maintaining the status quo is, for many consumers, more important than shortening the replacement cycle or upgrading.” But if the UK market is really ripe for a shakeup, Domestic & General warns that longterm commitment from providers is vital. D&G Director of Client Services Nigel Wilkinson says: “Over the 60 years that Domestic & General has been working alongside electrical goods manufacturers and retailers, we have seen the world of warranty littered with examples of companies entering and subsequently leaving the market, often leaving customers high and dry. Two prime examples were retailers Time and Tiny, who provided warranty products themselves. Many financial services organizations have entered the market only to move away when their lack of experience in this sector led to poor estimation of risk. It’s likely there will continue to be a small number of professional and highly experienced warranty providers in the electrical market, while others will come and go. “Domestic & General’s stance has always been to maximize the value of the warranty service, delivering long-term and sustainable benefits to consumer, retailers and manufacturers alike. What customers want is a sound solution to their problem when things go wrong. So we strive to deliver a comprehensive service, fast call-outs, fully-qualified repairs and efficient product replacements where required. We add further
If retailers are a major source of warranty sales, what do the providers have to say to them about their warranty products, sales support and after sales service? And how can retailers focus on creating or enhancing a valuable revenue stream in association with a warranty provider? SquareTrade’s Vince Tseng advises: “The combination of pending regulatory changes to favour increased competition when selling extended warranties, and the increasing tendency of consumers to research before they buy, means that retailers need to focus on choosing a warranty provider that is not just driving margin per sale, but also delivering a service that customers actively buy, rather than are passively sold. This entails offering a warranty that is researchable and has a track record of delivering service that meets and exceeds customer expectations.”
VINCE TSENG, MANAGING DIRECTOR, SQUARETRADE
Assurant Solutions’ Simon Harrison emphasises the importance of training, good product choice and interaction between retailer and warranty provider. “The sale of extended warranties,” he contends, “has to be an integral part of the sales process. If the retailer is confident that the product offered is right for the customer, an extended service contract adds value to continue the use and enjoyment of the product. “This means that retail sales associates need proper training and be confident in explaining the benefits of the warranty. Customers then can make informed decisions about whether it is right for them. Time and again, our retail partners experience significant uplift in penetration rates as a result of the training we provide. Even a 1% increase drives revenue. “This is all part of Assurant Solutions’ strategic performance management service provided to clients. This service offers training (to sales associates), in-depth sales analysis, ongoing reviews of the market, and support with point of sale marketing and new product design, all geared to ensure not only that the programme is delivering for our retail partners but also for their customers. “Using this approach including research into customer buying behaviour has seen sales attachment rates increase by more than 100 percent in less than 12 months for one of our major retail partners in the UK. “It is important to remember that, while training is vital to commercial success, the product itself has to be right for the consumer. Retailers have a wide range of customers, and the product needs to reflect the brand values of the retailer as well as the varying needs of their customers. In our opinion, one size does not fit all when it comes to product protection plans. And, of course, the service that backs up the product should really be an extension of the retailer’s own customer service proposition. It’s all about giving the customer a seamless experience that ultimately has a positive impact on their loyalty to the retailer. “Training staff and ensuring the sale of extended warranties is an integral part of the process is fundamental to maximising the opportunity, but retailers need to work with their partners to identify ways in which they can make their offer stand out to their customers. It’s not just a question of the cover itself but the service included.”
Domestic & General’s Nigel Wilkinson points to the company’s long experience and relationships. “We have a very large and very loyal customer base of independent retailers, from single store business to mini-multiples” he says. “Delivering customer service is absolutely key to every aspect of their business. They are happy to sell a high value warranty product because they know Domestic & General will look after their customers long into the future. Their long-term experience of working with Domestic & General, our commitment to quality and proven 94% satisfaction rating after a repair, all back this up. Of course, we also offer ongoing training, a dedicated dealer support team, full compliance literature and POS materials and solid margins on our products. “Warranties continue to be a relevant and popular product in today’s tough market, but retailers must be aware that warranties are a long way from being ‘all the same’. With a warranty you are not simply selling peace of mind to the customer, but the promise that they will be fully looked after, efficiently and without any hassle, should things go wrong. If you ensure your warranty provider can deliver on that promise and view warranties as a first class extension to your own customer service, then customers will continue to value your brand, your store, your advice and the products you sell long into the future.”
The warranty as added value UK Warranty director Kevin Brown sums up the benefits of close interaction between retailer and warranty provider. “There has been increased activity where retailers are using
“A warranty can be presented as value for money as part of the total package”
the warranty offering strategically, and seeing the value of the total sale of product- plusprotection. It is important to recognise the return on the overall sale, not just the margin on the goods alone, and more independent retailers are seeing the benefits of this approach. They’re all battling for customers, and a warranty can be presented as value for money as part of the total ‘package’, enhancing the service they provide to their customers. It’s very hard to win customers these days, and warranties can offer both value for money for the customer and margin for the retailer. “In supporting our retail partners, we focus on four main areas: Protect; Fulfil; Service; Grow. We can protect with a marketleading portfolio of warranty products. Good fulfilment means simple, easy processes for the retailer that are not onerous or intrusive on the sale, and are integrated through IT to minimise work. After sales service is handled by us through a UK-wide repair and replace facility. We can also help retailers to grow and upsell, suggesting other ways to enhance
their income, looking after even ‘uninsured’ customers by communicating with the retailer to discuss opportunities beyond warranties. “We want to say to retailers that there are alternative providers, and they should look at us. We’re very competitive on price, and retailers can consider sales in a different way, using warranties in combination with electrical goods as a sales and margin generator in the proportions they believe to be most attractive to individual customers. “Warranty is a tool for enhancing your customers’ overall experience. Think differently about your use of warranties to give yourself a competitive edge. Consumers want value for money and we can help retailers offer that. “We hope the OFT investigation is fair and balanced. Warranties have their place and are a consumer benefit. In today’s marketplace, retailers have to look at the longevity of their relationship with customers, and give them reasons to come back. Warranty products, used in the right way, can strengthen not only returns but customer loyalty.”
Competition Whatever the outcome of the OFT enquiry into electrical warranties, and the effect it might have on the market in the UK in 2012, it is clear that competition is going to be more lively next year, with providers actively attempting to convince retailers that warranty sales are a viable and profitable sales prospect in times that will continue to be difficult. Competition brings choice, and retailers have more leverage when a choice of warranty providers, all wanting the business, are fighting for it.
GET CONNECTED XMAS-NY 2011/12
Warranties are not all the same
What customers care about The annual Retailer of the Year Awards, sponsored and administered by warranties provider Domestic & General, are acknowledged as one of the UK’s most accurate and comprehensive measures of independent electrical retailers’ performance. The sheer size of the national survey, and the fact that it gathers information from the people whose opinions matter most to you – your customers – is an opportunity to collect and analyse ancillary data of vital interest to all independents. Domestic & General shares some of its insights with Get Connected readers.
n the UK’s biggest consumer survey of independent electrical retailers, more than a quarter of a million questionnaires are sent out to customers following a major purchase such as a TV or washing machine. For the 2011 competition, the surveys were posted on a continuous basis for a full 12 months from 1st August 2010 to 31st July 2011, using customer information gathered through retailer data, manufacturers’ product registration data and Domestic & General’s customer data. The survey provides a countrywide and unbiased return covering every independent electrical retailer in the UK.
GET CONNECTED XMAS-NY 2011/12
Unique opportunity for valuable consumer feedback
As well as supplying comprehensive consumer judgment for the Retailer of the Year Awards, the survey is a golden opportunity to take a huge national consumer sample of shoppers’ purchasing behaviour when they are considering the purchase of consumer electronics, major domestic appliances and small kitchen appliances. Domestic and General has used this opportunity for more than a decade to build a picture of what consumers care about: how brand, retailer choice, loyalty and word-ofmouth recommendation affect their buying decisions, and how their perceptions and attitudes have changed over the years. In addition to the Retailer of the Year survey questions, each of the quarter of a million-plus recipients of the survey are asked six questions relating to their reasons for choosing the product, the retailer and the brand of their new purchase. Each year Domestic & General analyses these results, which provide ongoing
and commercially important insights into customer purchasing behaviour. Domestic and General is this year sharing the latest survey information and headline findings with Get Connected readers, in the expectation that it will help retailers to shape strategies based on reliable and large-scale customer feedback.
“31.9% of consumers in the survey said that they choose their retailer on reputation or recommendation” How do customers choose a retailer? There has been a significant shift in some of the factors customers take into account when choosing a retailer. While loyalty to a specific outlet still stands at a reasonably healthy 27.8% of survey respondents, this reliance on previous personal experience of a specific retailer is significantly less influential than it was only a year ago, when 42% of respondents said they went back to a retailer who had served them well during a previous purchase. Clearly, the ties of loyalty to known independents are still reasonably strong, but, perhaps because of economic pressures and the need to be even more savvy when seeking out the best combination of top deals and top service, fewer consumers are relying on personal experience alone. They are listening to recommendations and finding out about a retailer’s reputation from a broader range of sources before deciding where to go.
Significantly, 31.9% of consumers in the survey said that they choose their retailer on reputation or recommendation. This is the first time in the history of the D&G survey that reputation or recommendation has overtaken previous purchase experience as a factor in retailer choice. So it appears that customer loyalty to a retailer, while still reasonably important, cannot be taken for granted. As D&G told Get Connected, “retailers cannot afford to simply sit back and hope their existing customer base will keep coming back.” It’s also important, in the light of this shift towards reputation and recommendations, for retailers to remember that every single contact with your customers, be it a oneoff in-store encounter, whether it leads to a sale or not, is an encounter with a potential ambassador for your business. Those experiences, plus all your other customer-facing activities through a website, advertising, servicing, dealing with problems and complaints, are all part of that reputation and recommendation network that could either enhance or damage future business. So, no matter how difficult, frustrating or apparently time-wasting any customer is, it pays to turn on the very best you can offer in the way of attention, help, advice and patience every time. They’re all potential ambassadors, and could pay dividends by triggering future visits from customers who want to buy.
What about brand choices? It’s a somewhat anomalous finding of the survey that, while consumers pay attention to recommendations when choosing a retailer, they virtually ignore recommendations from friends, family or colleagues when deciding
“Previous personal experience of a specific retailer is significantly less influential than it was only a year ago”
Looks are not that important It has become a watchword in the industry, encouraged by manufacturers and, we have to say, perpetuated by trade publications such as Get Connected, that customers are seduced by looks and style, and are drawn to certain products by visual attraction before they engage their more practical faculties and consider performance, reliability, features and fitness for their specific needs. However, only 10.4% of consumers surveyed gave importance to design and looks as a factor in their choice of brand. It is possible that this finding is of the same order that makes survey respondents say they place “personality” and a “good sense of humour” above looks as factors in choosing a partner. But, even with a pinch of salt, the design and looks factor takes so low a priority that retailers should recognise their customers’ need to be convinced that their choice is sensible and practical rather than emotional, whatever the underlying motivations might be.
Hard times take toll on upgrades It may not come as a huge surprise, in these difficult times, that the number of purchases which were straight replacements, rather than upgrades of previously owned products, has been steadily increasing over the past few years. A substantial 62.8% of consumers said they went for straight replacement rather than an upgrade. Last year this was 58.2%, and in the previous year 56.9%, so straight replacement seems to be growing in popularity. It’s a complementary finding that the number of purchasers upgrading continues to slide, from 27% in 2008/9 to 25.2% in 2009/10, down to this year’s 20.2%. It could be argued
that, particularly for long-lived white goods, any purchase is an “upgrade” from the last model, that may be ten years old, because of the massive strides in performance, technology and user features that have been achieved in the past decade. Consequently, a “comparable” model today represents far greater value for money than its predecessor, and it’s a tougher job now for retailers to edge customers towards an upgrade.
Consumers’ brand loyalty remains low Despite what most manufacturers would prefer to be the case, consumers’ brand loyalty has remained consistently low for a number of years. Only just over one in five (21.7%) of consumers in the current survey said they replaced or upgraded with the same brand they previously owned. This compares to a similar 21.5% last year and 21.4% the year before that. Interestingly, brand loyalty is lower for white goods than for consumer electronics. White goods achieved a lowly 20.6% while consumer electronics scored a slightly better 22.6%. The lesson for retailers is that the right product with the right features at the right price is more important than sticking to a brand, and almost four out of five customers will switch brands to get what they want.
Reasons to buy a brand Asked why they chose the brand they did, white goods consumers rated value for money (20.9%) as the strongest reason to buy that brand, with reliability (17.3%) second and price in third place (16.1%). Conversely, survey respondents indicated that the main reason to buy a CE brand was its reputation (19.6%), with price in second place (18.9%) and reliability third (17.4%). While these figures are not radically different from those seen in previous surveys, there is slight movement towards price and value for money as key brand drivers, which ties in with the increasing split of replacement to upgrade purchases.
Satisfaction guaranteed? When survey data from the Domestic & General customer satisfaction survey was merged and collated, it was possible to determine what ways of choosing a retailer eventually produced the most satisfaction for customers who used that retailer.
It emerges that customers who choose a retailer based on reputation or recommendation are most satisfied with the service. So recommendation is not only a potent source of customers, but also most likely to achieve a satisfying outcome for the customer who acts on the recommendation. A close second in terms of ultimate satisfaction with the retailer was expressed by customers who chose to shop there because they had purchased there before. So, if any retailer needs confirmation, taking care of existing customers is highly important to future trade. Then came choice based on shops which offered “a range of different brands.” Retailers who stock more brands have a higher chance of being chosen by prospective buyers. Finally, and significantly, the lowest index of satisfaction was recorded by customers who chose a retailer based on “advertising.” It appears that the outlets that spend most money on advertising their merits don’t always deliver on their advertised promises. But, if you do advertise, it’s important to make doubly sure that the overall retail experience you provide lives up to what’s advertised. It is a waste of money to spend on advertising your outlet if the only thing it achieves is that the customer visits once and has an experience that ensures they’ll never visit again.
GET CONNECTED XMAS-NY 2011/12
on which brand to buy. Only 7.7% of survey respondents said they choose a brand based on such recommendations. Surprisingly, this was even lower for white goods alone, where just 6.5% of consumers said they were swayed by recommendation. This makes it the least important of all factors influencing the choice of a white goods brand. The lesson for retailers is that customers are more reliant on their own perceptions of a brand, than on the perception of friends, family or colleagues. So, while it can be a good idea to steer your customer towards specific products and brands based on your knowledge of their individual needs, treat their original brand choices with respect because they are the result of personal perception.
GEORGE COLE GETS CONNECTED
George Cole George Cole pinpoints hotspots in the world of consumer electronics. E-mail: email@example.com
ROGER DARLINGTON ON THE FUTURE FOR DAB
lot has happened since my last
Darlington says the radio industry
piece on digital radio. Digital Radio
has to up its game. “The industry has a
UK (DRUK) and the BBC have
challenge to make the proposition more
a debate as to how we can upgrade radios for DAB+.” The situation of DAB in cars is looking
launched a two-year, £10 million campaign
compelling: improve the range of content,
promising, with the motor industry set to
designed to boost digital radio listening
develop new genres, improve coverage
fit all new cars with DAB radios by the end
(see news pages of this issue), and the
and improve functionality. It has to meet
of 2013 and the wider availability of digital
government is set to publish a report on the
this challenge if it wants the government
radio adaptors for existing car radios,
cost/benefit analysis of digital radio. Also,
to commence switchover.” He adds that
costing around £200 each including
Roger Darlington, chairman of the Digital
the cost of DAB radios is not a barrier,
installation. “The take-up of digital radio
Consumer Expert Group, which is advising
especially when you consider their price
has not followed the conventional ‘S’
the government on the digital radio
against other products like smartphones
curve growth pattern, with a slow takeoff
switchover, suggested in a speech that
and iPads. But what about the perception
followed by a rapid growth in sales and
the digital radio switchover could happen around 2019. He added that the switchover could occur in three phases, with the whole of England, except the south west and Cumbria, beginning in 2017, the south west of England and Wales in 2018, and Scotland, Northern Ireland and
mass adoption; rather, digital radio
“There are 30 million DAB radios out there and the industry feels that you can’t let down the consumers who own them.”
Cumbria in 2019.
GET CONNECTED XMAS-NY 2011/12
I spoke to Darlington to get a little more
has been almost a straight line increase, although Rajar [Radio Joint Audience Research] figures for Q3 2011 show significant growth,” says Darlington. So how confident is he that his switchover timetable will be met? “I should stress that this is informed
in some quarters that DAB is old – even
speculation on my part – there is no
detail. In his speech he noted that digital
obsolete – technology? Wouldn’t opting for
agreed timetable, but I would be surprised
radio listening accounted for 28.2% of
a newer technology, like DAB+ or DRM+,
if my timetable was out by more than plus
listening hours, a figure he described as
help sell digital radio as tomorrow’s
or minus one year. There are some people
“slower than expected.” So what explains
who think that the digital radio switchover
this slow trend? “The consumer proposition
“There are 30 million DAB radios
is not seen as particularly strong,” he says,
out there and the industry feels that
There are some who think it will never
“If you run through the major advantages
you can’t let down the consumers who
happen – they are wrong too. But the
of digital radio, they are not compelling.
own them. Ultimately, this is a business,
industry has a job to do in keeping people
There’s better sound, but many people
technical and political decision. If we
up to speed on digital radio. The digital
don’t listen to the radio attentively, so this
were starting today, we would use a
radios today are not the same products
doesn’t make a big difference to them.
newer technology, but we are where we
as of a couple of years ago; coverage has
There’s more choice, but the increase is not
are. What we’d like to see is all new DAB
changed since then, too. It’s important that
as great as going from analogue to digital
radios being ready for DAB+, ideally
people understand that digital radio is a
TV, and because coverage isn’t ubiquitous,
when the radio is taken out of the box.
moving sequence of events.”
not everyone can get the extra stations. The
But there are issues about licensing – the
extra functionality on a lot of DAB radios is
licensing fees start as soon as the DAB+
quite limited – the most common thing is
chip is activated, even if the radio isn’t
receiving DAB+ transmissions, so there’s
is just around the corner – they are wrong.
Roger Darlington has a good blog on digital radio: www.rogerdarlington.me.uk/digitalradio.html
FROM THE BENCH
3D TV: active or passive? Alan Bennett reviews the rival display systems
might be expected – a lot depends on the picture source material and the amount of signal processing applied by the film maker, broadcaster and at the receiver.
Living with 3D The biggest objection to 3D TV for most people is the need to wear spectacles at all, and they are currently required with all such home TV systems. There are specsfree 3D TV screens, but only in sizes below need recharging, generally via a USB socket
well, having a relatively narrow effective
has not fulfilled the hopes and
on the TV set. In early models the spectacle-
viewing angle. Good progress has been
expectations of those involved
synchronising emitter was external to the TV,
made with hand-held games screens. Some
but in new designs it is built into the bezel.
10-12% of people have sight defects which
in producing and selling it, partly because of the recession, there has been
With spectacles costing around £100, and
preclude good 3D viewing anyway. Another
no lack of activity by setmakers, who
as yet seldom compatible between rival TV
reason for the poor take-up of 3D TV is
saw it as a solution to the problem of
makes, throwing a kids’ 3D party or having a
that it is sometimes perceived as a quirk
waning thinscreen sales as that market
bunch of friends in to watch the Cup match
or gimmick, a trick effect which is not part
approaches saturation. The arena is now
could be expensive indeed. Some active
of mainstream TV, and thus not worth the
split between active (Panasonic, Samsung,
sets ship without any specs at all. XpanD
premium on its price. And of course there’s
Sharp, Sony) and passive (advocated
little spare money about right now!
by Sky, manufactured by LG, and now
universal (except Samsung Bluetooth types)
Philips and Toshiba) display systems,
active-shutter spectacles at about £120 retail.
with mighty wars of words between the
So – to help a customer choose, an active system is best for use with a Blu-ray player, and with a full-blown big screen home
rival manufacturers. Simplified screen
technology has recently brought down the
Passive TV screens simultaneously display
more appropriate to impecunious customers
price of passive 3D TV sets.
the images for both eyes, interlaced in
who confine their 3D viewing to broadcast
horizontal lines, and oppositely light-
pictures on a relatively small screen. There
polarised. Thus their viewing glasses are
are many shades between those extremes. It
The active system depends for its operation
much simpler – and compatible between rival
is important to pick a screen which shows a
on rapidly-sequenced alternate left- and
makes, and even with real-D cinema shows.
good conventional (2D) image because most
right-eye images on screen, with LCD-shutter
Their lenses are oppositely polarised for each
viewing will be in this mode. For 3D viewing,
spectacles blocking the ‘wrong’ image to
eye. The obvious advantage of a passive outfit
the bigger the screen the better.
each eye in turn. They operate from an
is cheaper screens and spectacles (LG pack
internal battery with a between-charges life
seven pairs with each TV!) and there are
of about 50 hours, and are synchronised with
others: very light ‘dispensable’ spectacles;
In the coming year the broadcast 3D
the screen by a Bluetooth or infra-red link.
and no image/peripheral flicker beyond that
specification will be tweaked to offer
The main advantages of active systems are
of a normal TV screen, hence less risk of
viewers control over the image-depth
sharp, clean, smooth-textured high-definition
effect, while ways are being sought to
cinema system, while a passive outfit may be
increase the transmitted definition of 3D
pictures, especially from Blu-ray playback;
The biggest drawback of passive 3D
and better compatibility with ordinary (2D)
TV systems is that they effectively halve
images. Meanwhile, Samsung is researching
pictures when viewed without the glasses.
the available definition per eye because
technologies for full-definition passive 3D
both eyes’ images must be simultaneously
TV screens to overcome the main drawback
viewing spectacles are more expensive than
present on screen. Thus with a 3D broadcast
to that system; and others are working on
passive ones; there can be flicker on the TV
the viewer actually sees a 960×540 pixel
the development of the Holy Grail of 3D
image and from other nearby light sources;
image; with an active system 1920×540
TV: large-screen displays which need no
they are claimed (but not really proven, at
per eye is possible with a full-HD picture
viewing glasses. A difficult nut indeed to
least on a large scale) to sometimes cause
source such as a Blu-ray player, integrated
crack. Toshiba showed a 55-inch specs-free
headaches, dizziness and eye fatigue; the
in the brain, according to Samsung, to make
prototype, ZL2, at the IFA show this year, and
spectacles are relatively heavy – though
a full-HD image. In practice the definition
is expecting to launch a production 46-inch
some later models are less so, e.g. Samsung;
shortfall of a passive display is not as
set this Christmas.
and inevitably the batteries run down and
noticeable in real viewing conditions as
On the debit side, active screens and their
Watch this space!
GET CONNECTED XMAS-NY 2011/12
about 20-inch; they don’t work brilliantly lthough the take-up of 3D TV
He is a keen golfer, a born optimist and a confident, bubbly lover of life. His support of Birmingham City FC did not, regrettably, lead to a trial for the club, which is perhaps fortunate since his alleged “bald spot” might have been confirmed by exposure on Match on the Day. As Sales Director of warranties provider Assurant Solutions, Simon Harrison has a lively and challenging time ahead of him in 2012 Why did you choose to work in the electrical industry? I’ve been in the financial and insurance sectors since 1995, which has involved working closely with members of the electrical industry Who in the industry would you like to spend time with? Stuart Cook, Chief Exec at Combined Independent Holdings and board director at Euronics. The buying group has experienced fantastic growth despite the challenges of the current economic climate What makes you laugh? Tommy Cooper, or anyone who laughs at their own jokes What was the greatest turning point in your life? Getting married Hobbies? Golf and supporting Birmingham City FC
GET CONNECTED XMAS-NY 2011/12
You have been offered a leading role in a film of your choice. What character would you like to play? Roger Rabbit – great ability to laugh and do cool stuff You have been offered the opportunity to rule the world for a day, what would be the first change you would make? Making it compulsory for people with opposing opinions to really work together to reach a solution that will bring about positive change, rather than walk away saying ‘it’s too hard’ Is there anything about yourself that you would like to change? People tell me I have a bald patch but I have never seen it so live in denial… but I suppose if they are right then I’d like this to change and have a full head of glossy hair!
What’s the worst lie you’ve ever told? ‘It wasn’t me’ … Not the worst but probably used most often
Any hidden talents? If you’ve got a talent why hide it?
Greatest regret? Not being spotted by the scouts for Birmingham City FC
Any particular fetishes? I’m in insurance… having a fetish would be too risky!
What historic figure do you identify with most? More a figure of recent history, Richard Branson – he’s not afraid to break new ground and is determined to make things work in difficult markets and be the best
What would you put into Room 101? It would be a close run thing between my gas BBQ and the X Factor!
How would you describe yourself? Confident, bubbly, lover of life
Favourite cuisine? Chinese
How do you think others see you? Hopefully the same but also as a bit of a pain at times as I’m very driven and results focused and expect everyone else to be the same Pet hate? Sorry – I’ve got two: lateness and people expecting something for nothing Any bad habits? Nail biting and eating too fast! If you weren’t in your present position, what job would you choose to do? TV presenter … though I don’t think Jonathan Ross need worry about his career just yet!
What’s your greatest achievement? Getting my university degree despite all the distractions
What’s the worst thing that’s ever happened to you? Breaking my shoulder whilst playing hockey What’s the best kind of punishment…. I’m more about prevention than cure! …and who deserves it? We’ve all probably done something that we shouldn’t have – but most of us learn from our mistakes and make the most of the chances we get to make amends Where do you see yourself in 5 years’ time? Still enjoying what I do on a daily basis What’s your greatest fear? Heights, although I’d love to do a parachute jump - which is weird Who (from any walk of life) do you most admire? Sean Penn for his work following the Haiti earthquake What’s your favourite piece of kit? My golf clubs What motto do you live by? Work hard, play hard and enjoy all the ancillary benefits and joys that brings Life is… …an endless stream of challenges and opportunities designed to allow you to have a positive effect on yourself and those around you
What sort of music do you like? Soft rock Favourite quote? “I am an optimist. It does not seem too much use being anything else.” – Winston Churchill Who has been the greatest influence in your life? My parents and my brothers Name your poison Spanish red and French white wine – that’s as sophisticated as it gets!
Favourite TV programme? Spooks
What do you daydream about? Sunnier climes
What surprises you? People constantly surprise me – and generally in a positive way!
Favourite holiday destination? Thailand
Electrical retailer: “I heard some banker on the TV saying ‘the closer you are to the money, the more of it you make.’ This shop has definitely been the wrong place for me to be standing this year.”
“Powerful and effective with very good filter efficiency” Trisha Schofield, Head of Testing, Good Housekeeping Institute
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Awards of Excellence Retailer of the Year 2011
250,000 consumer surveys 1,000 retailers reviewed and rated 8 key questions on retail service Only 3 winnersâ€Ś
Retailer of the Year 2011 celebrates the very best in retail customer service. Each year Domestic & General sends out over 250,000 surveys asking consumers to rate their recent retail experience. Retailer of the Year is the UKâ€™s largest and most comprehensive consumer survey of independent electrical retailers. Congratulations to this yearâ€™s winners.