The Euronics press event changes every year and this year there was a ‘theatrical’ presentation in German that was intended to highlight the desire of Euronics to be the leader in the Smart Home – moving from selling products to selling solutions and services. This has been a theme for the company for the last few years.
For those of our readers that don’t know the company, the Euronics group is a buying group that operates through franchises throughout the region, making the company a significant global retail brand.
Euronics CEO – John Olsen Image:Meko
The theme of the company is “A human touch in a digital world” and the company wants to continue to be a value added retailer.
The company then tried to show a video, but there was no audio, confirming the contention that technology does not always do what we want. It was clearly very embarrassing in front of the CEO, John Olsen and the Chairman, Hans Carpels but then we usually see Euronics’ strength in buying, organisation and sales, rather than marketing!
There will be a new corporate identity next year. We got some previews of the identity, although some slides were skipped quickly. The company wants to combine with other local brands (like Boulanger in France which has a strong brand of its own, but is part of the buying group).
Euronics has a new Identity – still with a star. Image:Meko
The company is now truly Europe, Middle East and with Africa as the first Euronics store has started in Egypt and more stores will roll out in that area.
Looking globally, the company stayed in fourth place, with a small decline to €18.8 billion, behind Best Buy (€37.2 billion), MediaMarkt (€29.9 billion) and Suning (€20.2 billion) and ahead of Yamada (€13.4 billion) and Dixons Carphone (€11.9 billion).
Currency issues were significant in the last year. For 2017, the consumer electronics segment was down in Q1 and Q2 was harsher, but the company expects a pick up in the second half. Last year there were the Euro soccer championships to boost sales in the first half of the year.. Telecom increased by around 3.6% in Q1.
Euronics showed this market development data. Image:Meko – click for higher resolution
Online continues to grow, but the rate of growth is slowing and offline sales will remain around 80% of the total looking into the future,Euronics belives. This is very different, country by country across Europe. In the south, just 4% of the market is online, while in Germany it’s in the 20s and the UK is in the 30s.
Omnichannel performance is getting better and the company said it has received good feedback on the developments in the chain.
Euronics Chairman, Hans Carpels Image:Meko
In store, all senses need to be engaged to achieve a ‘point of emotion’ rather than ‘point of sales’, Carpels said. Overall, the tech consumer goods market is very stable, although different segments grow or decline at different speeds. OLED TV is developing well alongside smart speakers as an opportunity. Business gets more competitive, so efficiency remains a critical factor.
Post purchase support is critical as well as in store support. Margins to pay for this are unlikely to rise and that will remain a challenge to the business model for retailers.
“Smart home” is not moving as a market as quickly as hoped for, but some things are helping that development, especially voice control. The company is selling Google Home smart speakers and has some “not yet public” plans to develop this.
The world is changing in very rapidly and in unexpected ways. People do not want to be told what to think and in the US, Carpels said, 4789 stores closed in the first four months of this year. Shopping malls are closing and in Europe over 36,000 stores have disappeared in the last twenty years.
Euronics wants to see a proper structure to allow the support of offline services. The tax situation for online suppliers is also unfair, Hans Karpels believes.
We asked Carpels about this issue and he told us that in some countries, the retailers are clearly trying to charge separately for services. However, the stores also do work to develop markets for brands and this should be rewarded by the brands.
Another journalist asked if selling Alexa is a kind of ‘trojan horse’ – getting Alexa into the homes of customers may accelerate the rate at which consumers buy online. Carpels said that it was a risk, but there is little choice.
Analyst Comment
Last year, Euronics made a big deal of big domestic batteries which the company saw as a very big opportunity. However, there was no mention this year, so perhaps this is part of the slower development of Smart Home that Carpels had remarked on. (BR)
