Euronics Cuts Costs with Press Event

Euronics changed the format of its annual IFA press event this year and ran it at the back of its booth – we suspect that this was a cost saving measure. The company started by saying that, once again, it has expanded its geographic coverage and that Sharaf DG is now looking after Egypt, although the business is run from the UAE – and that means that Euronics is now active in 36 countries.

In terms of turnover, the consumer market is stagnant but the company grew turnover to €19 billion. In Europe, as a retailer of technology goods, it remains second to Mediamarkt and above Dixons Carphone, Expert and Darty (which is to be consolidated with Fnac in the future). Globally, the firm believes it is in fourth position behind Best Buy, Mediamarkt and Suning (China), and is ahead of Dixons and Yamada of Japan. Suning is the biggest in terms of growth.

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The 22 biggest countries are basically stable (+0.2% overall in consumer revenues). Consumer IT is in decline but major domestic appliances (MDA) are up and telecom is also up. Ukraine is starting to recover again and Russia is past the worst, Euronics believes (not everyone agrees on this, as the country’s reserves are rapidly running out as the cost of borrowing is hit by sanctions and oil prices stay low – Man. Ed).

Hans Carpels is the CEO of the group and he spoke next. The group enjoyed its 25 year birthday celebrations last year and did a lot to promote the brand. This was successful, so more campaigns will be developed in the future. It has made promotions with HP, Intel and also with Samsung in TV. It also ran a campaign around cooling.

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There is a change in focus in retailing to reflect consumers’ habits, so Euronics needs to add online and new experiences. New businesses also need developing in the face of limited growth in traditional categories. Omni channel is now established as a concept and the online and instore presences have to support each other – the consumer decides how to buy. Stores have to improve their IT to make this work. As Carpels said last year, improvement means a huge investment. In the six biggest countries alone, €80 million will have been spent over the last three and next three years. He believes there is no alternative.

Touching products is very important in stores. Stores need to change from being a ‘point of sale’ to become a ‘point of emotion’. There are new businesses and many new opportunities. Smart home is a major area, as Carpels has said at the event for a couple of years, but there is a gap in market development – smart home is ‘in the chasm’ at the moment. It’s a fragmented market with areas including security, energy and lighting (and more) so it’s complicated.

Euronics tech trends

Platforms of the IoT are starting to evolve towards fewer options – Euronics believes that the Allseen Alliance seems to be the way to go. There are many more smart home devices, but consumers want simplicity. There will be a real need for services to support the market and Euronics wants to be the ‘supervisor’ on behalf of the consumer. It is already involved in several initiatives to develop this.

The company has developed a VR-based movie about the smart home to help to communicate to the consumer. Euronics has research that shows that many consumers are ready to pay €20 per month for home services such as security. Euronics is already in the home – so wants to move to this market and has a chance as it is trusted.

Houze (ze = zero energy) is a new concept for Euronics. If you have an old thermostat, Carpels said, you should visit a store. Zerocell is a new home appliance – 8KW of battery that ‘makes smart products smarter’. Euronics thinks that big batteries will be a big business in the future and will promote Zerocell.

Without energy storage, solar doesn’t make so much sense, Zerocell thinks. Like a fridge, it also makes sense for every home. It can power the home when the grid is down. It can also act as a wifi hotspot and connect the IOT. There will be 4kW/8kW and 16kW versions.

Euronics will sell and install the batteries.