Old format stores dragging the chain as Dick Smith races to upgrade

By Patrick Avenell

SYDNEY, NSW: Woolworths is racing to reposition its entire Dick Smith chain of stores with the new format, with sales results showing a marked increase in sales in the Techxperts stores compared to older format stores.

Sales in new format stores jumped 16 per cent in the first half FY11 trading, compared to only 6.5 per cent across the entire Dick Smtih network. As it stands, just over half of the Dick Smith network has been upgraded, with 186 of the 337 stores now carrying the new branding.

Across Woolworths entire consumer electronics business in Australia, the group totalled $726 million in sales for the period 1 July 2010 to 31 December 2010. This was a 2.3 per cent increase on the first half of FY10. Margins, however, fell from 27.5 per cent to 26.35 per cent, whilst the cost of doing business has also affected net return, rising 30 basis points to 23.93 per cent.

Woolworths’ positive sales result in Australian consumer electronics is attributable to a steep increase in sales across the second quarter of FY11, which included the Christmas sales period. October through December 2010 saw a 4.2 per cent increase in sales on the same period in 2009.

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Woolworths credited an explosion in computer and tablet sales for such a position showing.

“The laptop and tablet category has seen strong growth through more competitive pricing, new improved range and presentation in new format stores,” said a spokesperson.

The gaming market, which was a cause for concern at JB Hi-Fi, is booming at Dick Smith, with the half year results claiming an increase in market share.

“We have significantly improved our offer in the gaming category with interactive areas in new format stores increasing market share through the launch of new gaming consoles.”

The common theme in both these quotes is new format stores. With sales clearly improving at a faster rate in the new stores, the emphasis is clearly on rolling out as many new format stores in the shortest time possible. Furthermore, this rollout has now commenced across Woolworths New Zealand Dick Smith network.

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