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Market Commentary

​​Weekly Retail & Leisure News - 08 June, 2015

Physical retail drives growth for Dixons Carphone as AO announces losses

Two of the UK’s largest electrical retailers released contrasting results last week. Dixons Carphone raised its full-year profit expectations, as group LFLs increased 9% for the 17 weeks to May 2. Its UK and Ireland business performed particularly strongly, with LFLs jumping 13%. Online electronics retailer, AO, also unveiled sales growth; however it announced a pre-tax loss of £2.9m. AO’s shares have fallen 40% since the start of 2015 as it has missed a number of sales targets.

Dixon Carphone’s success shows the importance of having a true omni-channel offer, one of the themes covered in our Redefining Retail Places project. Physical retail remains at the centre of its strategy, and the 1,200 store portfolio has proved to be a great platform for Click & Collect, an important fulfilment tool in today’s increasingly digital world. Dixon Carphone’s stores also offer a strong after sale support-service, a clear differentiator from pureplay retailers such as AO and Amazon.

In recognition of the importance of physical space, many online brands are now opening up their own stores. Peak Boutique, opened its first shop in Newcastle last week and intends to expand further.  In addition, Loaf, the online furniture retailer, will be opening its first brick and mortar store in Battersea this autumn and value etailer, Missguided, has announced it is taking space in Selfridges’ flagship in Manchester. Could Amazon follow suit? Last week, an independent survey found that over 50% of people would like to see Amazon take space on the UK’s high street.

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