FEARS over the economy hit the high street yesterday with the news that the electrical chain Currys.digital will close 77 branches amid a slump in consumer confidence.
Surging household bills and a slowdown in growth are putting intense pressure on shops, forcing them to cut prices just to keep existing customers.
Struggling parent company DSGi yesterday said it would not renew the lease on about 40 per cent of
its Currys.digital stores – formerly trading as Dixons – as part of a £50 million cost- cutting package, which may also see hundreds of jobs axed.
John Browett, the DSGi chief executive, also unveiled a "consumer-focused" revamp of PC World and Currys to improve staff training, choice of products and shop designs in a three-year turnaround, which would leave them "unrecognisable".
The announcement came a day after the Governor of the Bank of England scuppered hopes of a further interest rate cut this year and sounded a warning that a severe pinch on household spending power would send consumers into retreat.
DSGi has been one of the major casualties of the slowdown, issuing two profits warnings this year and suffering continued trading difficulties in Italy. It operates more than 700 stores in the UK – over 80 per cent of which are Currys and Currys.digital – and more than 500 across Europe.
Currys.digital replaced the Dixons trading name in 2005 as the firm tried to shake off a reputation for surly and poorly-trained staff. The firm did not say how many, if any, of the six Currys.digital shops in Scotland would be closed.
As well as the impact of the consumer spending downturn, Currys.digital will face increased competition from the American retail giant Best Buy, which recently announced plans to open consumer electronics stores in Britain.
Nick Bubb, a retail analyst at the financial services organisation Pali International, said: "Electrical stores are suffering, although the toughest area is furniture because consumers are holding back on the discretionary, big-ticket purchases.
"There is a room on the high street for some kind of electrical retailer, but whether the existing formats will succeed isn't clear."
Mr Browett, who was brought in from Tesco at the end of last year, said the group's emphasis would switch from just being on "product and price", to having a much bigger range of goods and more helpful sales staff.
He said: "By the time we have finished, the business will be unrecognisable from how it is today. It is a long way from just a sales emphasis on price and product.
We have an enormous amount to do, and there is no quick fix. The key thing is to serve our customers well."
Mr Browett said his review had shown that customers had complained that they had been unable to buy the goods they wanted, that they were disappointed with customer service both pre- and post-sales, and that they wanted "more exciting" stores that were easier to navigate. New format trials will be in place at 10 per cent of the PC World stores in time for this Christmas, the group said.
The computer retailer suffered particularly badly in the UK during the last Christmas trading period, with like-for-like sales down 10 per cent.
The poor performance contributed to DSG International eventually warning that profits for the year to 3 May would come in between £200 million and £210 million, down from £295 million the year before.
Mr Browett said: "The economic backdrop makes it difficult to forecast business performance and we remain very cautious about consumer confidence in many of our markets."
Earlier this year the group announced the closure of 40 stores in Italy.
The full article contains 625 words and appears in The Scotsman newspaper.
