Carphone Warehouse 2015 Annual Report Download - page 16

Dixons Carphone plc Annual Report and Accounts 2014/15
Strategic report
Our resources
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environments offered by our transformed stores in which
customers can experience their brands and products.
We work closely with suppliers of all sizes to help them deliver
the right product for customers, through the forecasting and
planning stages to ensure we deliver the right levels of stock
for customers at the right time. Both the mobile and electrical
industries are characterised by a number of large global
manufacturers, who account for a large proportion of our sales.
However, we also source products from a large number of
smaller suppliers. We seek to maintain strong relationships
with all of these suppliers, not just to source the right product
for customers, but also to ensure the Group can purchase
the appropriate level of stock on favourable terms. While we
utilise the Group’s scale and buying power through an
international buying team, we also maintain strong
relationships at a local level.
We continue to refine our own-brand ranges to suit all budgets
and tastes. Our most notable successes have been the launch
of our own Sandstrøm cables brand alongside our Essentials
ranges as key entry level products in our ‘good, better, best’
line-up. These products are sourced by the Group’s teams
based in the UK and Hong Kong in collaboration with
manufacturers in, for example, Asia.
Distribution and logistics
The Group sees distribution as one of the keys to success in
maintaining highly competitive margins and delivering
outstanding, market beating service to customers. We operate
a centralised system of distribution centres for each of the
regions in which we operate. This delivers significant
competitive advantages, including reduced operating costs,
reduced supplier delivery costs, reduced stock volumes in
store, increased flexibility as to where to deliver and when,
and a more efficient home delivery network for both us and
our customers.
While continuing to reduce costs, we are also constantly
raising the bar, both in terms of successful delivery and
installation rates, but also the range and quality of services
we offer customers nationwide. In our Nordic operations
(Jönköping, Sweden) and the UK (Newark), we operate two of
the largest distribution centres of their kind in Europe. In the
UK alone we now make 50,000 deliveries per week, including
some 500,000 installations per year.
Store portfolio
We operate a wide variety of stores to suit the local customer
demographics. We operate many high street locations, small,
very popular outlets in airport locations and ‘megastores’ up to
60,000 sq ft, in out-of-town locations.
We constantly review our store portfolio to ensure we have
the right store for customers in the most competitive locations.
As part of this ongoing review and following the rollout of
Carphone Warehouse SWAS, in the UK & Ireland we are
currently trialling 3-in-1 stores to help determine the end state
property portfolio. Separately we also continue to transition
Currys and PC World stores to a 2-in-1 format in the UK &
Ireland. These stores allow us to offer the best of both worlds
to customers, attracting new footfall and often at a lower cost.
In the Nordic region as well as Greece and Spain we also
operate a number of franchise stores. This arrangement allows
our brands to be present in a wider range of catchments, while
increasing the volume of purchases and therefore buying
power of the Group.
Intellectual property
Within our Connected World Services division we have
developed our pioneering multi-channel assisted sales tool
Pin Point powered by honeyBee. We are also utilising our
intellectual property to assist third parties, such as Samsung
and now Sprint, in connected retailing.
In the UK & Ireland we operate through Carphone Warehouse,
Currys and PC World brands, in the Nordics through its
various Elkjøp and Phone House brands and in Greece
through Kotsovolos and in Spain through Phone House.
These brands are extremely well-established and respected
in their markets. The Group also has two strong service
businesses, KNOWHOW and Geek Squad, aiming to delight
customers from end to end while generating significant new
business opportunities.
As well as our retail and service brands outlined above, we also
sell a range of own brand products such as Sandstrøm, Goji,
Logik, Essentials and Advent. Each of these brands have
specific target markets defined in conjunction with our
customer research findings.
Energy
Saving energy is good for the business, good for customers
and of course good for the environment. We take energy
efficiency extremely seriously and whilst we have already made
progress in a number of areas, we are investing in a wider
range of initiatives to significantly reduce our consumption
going forward. These include Variable Speed drives to optimise
the efficiency of in-store heating, ventilation and air
conditioning systems and new efficient fluorescent lighting in
a number of stores. Efficient LED lighting has been trialled in
back of house areas which we intend to roll out to further
stores and the 65,000 sq ft Customer Call Centre in Sheffield
has been upgraded to LED lighting throughout.
Cash and capital
It remains the Group’s policy to maintain a strong capital base
so as to maintain investor, creditor and market confidence and
to sustain the future development of the business. Through
careful working capital and balance sheet management, a
focus on cost reduction as well as efficient use of capital,
management is focused on ensuring we deliver a sustainable
business with strong cash generation.
As a Group we need to make the right choices as to how each
division utilises or preserves cash, whether it be in determining
ranges and stock held in store, growing mobile share with
accompanying working capital utilisation or managing returns
and related processes.