Retailing and E-retailing: CURRYS - Dissertation Example

Retailing and E-retailing: CURRYS Introduction For an organization to survive in a competitive market, new products or services have to be offered to the customers through various multi-channel approaches. Multi-channels approach should be followed because the customers should be given multiple options by the organisations, to ‘make’ them buy the product at their own conveniences. “In practice most consumers make multichannel choices and think nothing of it: we may buy groceries in the supermarket, insurance by telephone and clothes by mail-order catalogue; or we may buy the same kind of goods via different channels depending on our mood, location or the time available.” (Baker 2008, p. 323). Organisations and businesses all over the world are adopting this approach, with the advent of internet optimally aiding it. Thus e-retailing along with the traditional retailing has become important channels in the multi-channel approach. From time immemorial, shopping through retail shops or ‘structures’, has been a common feature of people’s shopping habits. From organizational perspective also, successful retailing of its products is the key for its success. However, the advent of internet has brought immense changes in the ways people used to shop. E-retailing or online shopping has become a habitual feature in the lives of many shoppers. Shopping from the comfort of their houses, without any time restrictions and cheap prices have lured numerous shoppers towards online shopping. Because of this evolution of the shopping trend, many organizations are going for multi-channel approaches to sell their products. Not to be left behind, Currys has diversified its operations by incorporating e-retailing along with its retail shops to sell the products. This report will focus and will critically evaluate Currys retailing as well e-retailing operations from the perspective of Porters’ Five Forces, Retail Mix and Ansiff’s Matrix, finally coming up with recommendations to further improve its services. Company Background Currys, belonging to DSG International plc, is a leading supermarket chain for electrical and electronic goods in UK and Ireland. It is specializing in household electrical and electronic appliances, selling wide range of products such as television sets, computers, laptops, palmtops, MP3 players, digital cameras, camcorders, games consoles and many more. Apart from selling through retail stores in the form super stores, high street stores, Currys sells products in the virtual sphere through its digital stores or website. Currys is mainly focusing on meeting the customer’s demand by unbeatable combination of value, choice and service through innovating in pricing, product marketing and first initiative moves. (currys.co.uk). 03. Methodology 3.1. Primary Research The UK market includes not only England but also, Scotland and Wales excluding Northern Ireland. Such a vast geographical region requires a very high level of groundwork in all three aspects – design, planning and implementation. Such a research strategy must focus on identifying the potential attitudes of consumers towards existing retailers of consumer electronics and electrical goods (Chen, 2004). A questionnaire also must be designed and handed out to consumers at strategically important places in the cities and locations, where Currys in located. In the online store, an option for online surveys would be more beneficial and strategically advantageous to the company. 3.2. Secondary Research Next the company should carry out some secondary research by poring over already published annual reports and other reports on rivals’ strategies and marketing tactics. Tesco, Sainsbury’s, Asda and other numerous smaller retailers have already made their presence felt in every nook and corner of the UK market. Thus it is obvious enough that a new comer or a late starter and importantly second rung players in to the UK market will have no any other choice except to adopt either a follower’s strategy or a nicher’s strategy, because it can neither lead nor challenge the existing stores of consumer electronics. Market Overview The consumer centric electronic and electrical industry has seen a significant increase in demand for products and services globally, and particularly in the UK electronic market, where is sizeable and positive growth. With such sales, UK is considered as the fastest growing electrical market in Europe contributing 19.7% of the total business. “The UK electrical market achieved robust growth of 1.2% in 2008. Though this represented an underperformance of the wider retail market, it was much stronger than the other home sectors.” (verdict.co.uk). That is, with tough economic times acting as a dampener, many electrical and electronic retail firms are struggling to achieve positive growth. “With the market hardening under the daily hammer blows of worsening economic news, one would expect more volatility within the list.” (). However, big players and few small players in the electronic retail market particularly online retail market are showing good growth, notwithstanding the economic downturn. “Amazon, Argos, Play and Tesco headed up online retail in the UK during the past quarter, according to the latest UK Hot Shops List out from IMRG-Hitwise. All four, which have strong consumer electronics offerings, managed to retain the same positions as last quarter” (). Thus the consumer electronics and electrical goods in the UK market have an inelastic demand trend now (UK Electricals Retailers Research Report, 2007). Retail and E- Retail 5.1. Porter’s Five Forces Figure 5.1: Porter’s Five Forces Source: www.mindtools.com 5.1.1. The threat of new entrants  The retail operations The threat of entry by new firms will have both positive as well as negative impacts on the firms. However, Currys are ‘insulated’ from any of these impacts because of the longstanding nature of its retail operations. While new entrants to the electronic sector come and go on a regular basis, stalwarts such as Currys continue to push the boundaries, giving their customers what they want, when they want them at a price they can afford. (maxxsave.co.uk)  The E-retail operations E-retailing is a new trend in the UK electronic market and it has less entry barriers compared to the other marketing channels (Dennis, 2004, p. 25). Because of this nature of e-retailing operations, new websites offering varied and cheap products may come up in the virtual sphere. These firms or websites also may not be a big threat to Currys, as these customers will only go for trusted names.  Evaluation From the above analysis, it is clear that Currys is not negatively impacted by the threat of new entrants, maximally remaining unaffected. Because of its strong brand, market share and solid customer base, they will continue to elicit good response in future as well. Socio-economic conditions could impact its operations, however threat of new entrants will have only an minimal impact 5.1.2. The threat of substitutes  The retail operations There is an ever increasing tendency to come up with substitute products, especially in the technology-centric electrical industries like the one in which Currys operates. However, as these substitute products will not be sold in the mainstream markets, and only sold in the gray markets, Currys is not negatively impacted by it. As the gray market goods resellers can be sued on the basis of copyright and trademark infringement, and has Currys did not directly manufacture these products, it is having minimal threats (Bhatia 2008, p.316)  The E-retail operations Currys has transformed its business policies to improve customer buying experience with broader choices and importantly quality branded products. In times of threat from substitutes, upgrading the quality of the product or differentiating it will only make it a success and with Currys following that pattern, it may not be negatively impacted by the substitutes. (Porter 2008, p. 32).  Evaluation Currys current operations are highly determined by the combination of its super stores, digital stores and online stores, with successful and quality brands. As the customers will mainly go for these types of brands, Currys are not threatened much by the presence of substitutes. Since, it does not produce its own electrical goods and moreover it has realized the strategic importance of e-retailing (thereby minimizing its ‘competition’ with the gray market), it has effectively curtailed the threat of substitutes. 5.1.3. The power of buyers  The retail operations Buyer power is perhaps the most effective force with far reaching consequences for the Currys because they only decide what is in the shelf, profits, survival and success of each retail store. With Currys receiving customers or buyers from different age groups, incomes, preferences, etc, each one will have different wants. (Hawkins & Coney 2003). Based on that necessity, Currys has planned and arranged products in its stores according to the mindset, buying style, etc of the above mentioned different buyers.  The E-retail operations Although, some organisations will be sceptical about increasing the power of buyers, Currys is increasing the power of the buyers to help them make correct decision about the products. That is, in its e-retailing website, Currys has featured a lot of information for the buyers particularly detailed buyer guide for each product. For example, “Currys' Buyers Guide to Fridge Freezers: Helps you choose the right fridge freezer for your needs and lifestyle.” (currys.co.uk). Like this, there are buyer guides for every product and this strategy will increase the buyer power because most of the customers who intend to buy online will do a lot of research.  Evaluation Although, due to current global economic downturn, the customers spending power and thereby buying power have been affected, Currys with certain productive strategies are trying to increase the buying power. By providing them with beforehand information and good tips about buying correct products through their website, and also by aptly and enticingly arranging the product, Currys is increasing the buyers’ power, thereby pulling them to the stores & websites 5.1.4. The power of suppliers  The retail operations Majority of the organisations will depend on suppliers to continuously and optimally run their organisations. Likewise Currys is also optimally coordinating with its suppliers without taking any unilateral decisions especially regarding the issue of asking the suppliers to pay to have their products placed on the shop floor, thereby balancing the suppliers’ power. Currys always takes decision regarding this aspect in consultation with suppliers and is seldom unilateral in nature. For example, listing fees are only requested from those suppliers that that have dedicated areas in-store and it has only been negotiated for some of the newer stores. (guardian.co.uk 2009).  The E-retail operations Like during all E-retailing operations, the role supplier power is of minimal nature during Currys E-retailing operations. “The online e-market trend will accelerate and further weaken suppliers' power and profitability positions within a value chain” (Taylor and Terhune 2001, p.110). This being the case, Currys E-retail is not impacted by suppliers’ power and is operating in its sphere, without any external influence from the suppliers.  Evaluation Currys is optimally using the suppliers’ power according to its area of operations. That is, even while coordinating with them in its retail operations, Currys minimizes their role in its e-retailing operations. Apart from not asking the fee from the suppliers to place the product, even discounts on invoices are done selectively and in consultation with suppliers. This clearly shows the mixed role of suppliers’ power. 5.1.5. Competitive Rivalry  The retail operations The UK electrical market operates in a highly competitive environment because there are only a few barriers to entry. Therefore new competitors for Currys are joining and leaving the market and importantly big players like Tesco, ASDA, Comet and so on are here to stay. Because of this situation, Currys is continuously monitoring the current and potential competitors in the electrical goods market and bringing in the appropriate changes especially in the pricing aspect and discounts (Retail Futures - UK Electricals Report, 2009).  The E-retail operations Currys is facing a huge competition in the e-retailing front due to the varied choices for the customers found in the internet to facilitate online buying. Apart from the websites of the Currys direct electrical retailers and UK’s big players, there are many well known and extensive selling websites like Amazon, e-bay, etc, etc. Thus competition for Currys is from many perspectives, however Currys is handling this competition by optimally positioning its internet sales especially through the PIXmania e-tail internet sales engine (Retail News, 2006).  Evaluation From the above analysis, it is clear that Currys having an increasing number of competitors in the highly dense coverage area in UK. As there are minimal barriers and high power buyers, competitors flood the offline market as well as online market, putting pressure on Currys. However, as mentioned earlier Currys with its long standing brand image and customer is withstanding this pressure. Also, as part of proactive steps, Currys is introducing new products with lower prices to make the first impression and with the acquisition of ninety-percent stake in PIXmaina’s parent company, Fotovista, Curry has got an edge over its online competitors. 5.2. The Retail Mix 5.2.1. Convenience for the customer  The retail operations Customers are the ‘Kings and Queens’ of any business, so their comfort and convenience should be taken care, when they enter the retail stores to make the buying. Currys full departmentalization, including better store space, vast product range is able to make the customers visit to the store a convenient one. For example, at 60,000 square feet, the Junction 9 Currys Megastore is the retailer’s and the UK’s biggest electrical outlet, having more than 10,000 products in-store with over 200 different TV’s, 120 digital cameras, 100 MP3 players, 250 fridges and freezers and 150 laptops and PCs. (dsgiplc.com 2009). Importantly, to further optimize the convenience of the customers, Currys stores offers customers a ‘hands-on’ product experience. That is, interactive ‘play tables’ have been added allowing customers to pick up, turn on and test out a wide range of products before they purchase  The E-retail operations Currys’ E-retailing operations have customers’ convenience as its top most priority. Apart from having an easy to access website, Currys reaches the online ordered products aptly to the customers and also ensures it is correctly installed for the customer to use immediately. Currys offers customers a "hassle free" shopping experience with the convenience of next day delivery, seven-days a week and delivery slots from 7.00am to 10.00pm, as well as installation services and comprehensive after-sales support. (dsgiplc.com 2009).  Evaluation From the above discussion of Currys’ customer centric activities, it is clear that Currys has implemented and is still implementing optimal measures for the convenience of the customers. By aptly planning and arranging its stores particularly fulfilling the need of customers to have a ‘touch and feel’ experience before making the buying decision, and importantly by providing the customers hassle free shopping experience through its E-retailing operations, Currys has done optimum work for the convenience of the customers. 5.2.2. Customer value and benefits  The retail operations The value of the customer is clearly understood by the customer and so it provides many benefits under various schemes, especially through ‘Reserve and Collect’ scheme. Under this scheme, the customer can find a product of their choice through online, phone and reserve the product and collect the product at the store within 1 hour. Importantly, the product is reserved at a guaranteed low price, with no pre-payment and also the item will be reserved until the end of the next trading day. (dsgiplc.com 2008). The value and the benefit to the customer is that they can make a quick buying without spending too much time at the store and also they can collect it for lower price.  The E-retail operations E-retail customers are maximally getting values and benefits from ‘Reserve and Collect’ because this scheme started mainly because of the E-retail operations and also because the scheme starts off at the E-retail end only. “After research showed more than 50% of customers visit the Currys.co.uk site before entering a store, a simple new ‘Reserve and Collect’ service has been launched.” (dsgiplc.com 2008). In today’s internet enabled world, many customers do online research before buying the product in the store, so this schemes coordinates both these separate process, enabling Currys’ to provide maximum value and benefit to the customer.  Evaluation Thus, it is clear that this ‘Reserve and Collect’ is providing maximum benefits to the customers, simplifying their shopping experience. By placing an order through the net or phone and then collecting the product at a lower price quickens and simplifies the whole buying process. Currys’ with this scheme is providing quick, low-cost and effective service to the customers. . Read More