Ben Terry - more than just shops - Location Planning Manager
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Ben Terry Location Planning Manager -- more than just shops
Dixons Carphone plc is Europe’s leading specialist electrical and telecommunications retailer and services company, employing over 42,000 people in twelve countries
Shop keepers?
Have to be more than Shop Keepers
Increasingly
complexity and cost
Retail supply chains
Diversity of goods and how customers want them
Store Reserve &
Store Same day Online Installed
setup collect
✓ ✓ ✓ ✓ ✗ ✓
✓ ✓ ✓ ✓ ✗ ✓
✓ Some ✓ ✓ Some ✓
✓ Some ✓ ✗ ✓ ✓
How we currently do things - Newark o Centre of our UK&I Operations o Serves all UK&I Brands o Over 1.5m sq. ft. with max 4000 colleagues on site o Home Fulfillment Centre via CSC’s o Branch Fulfillment Centre o Small Products Warehouse o Customer Repair Centre
Building 1 Overview
Building 1 Building 1
o HFC (Home Fulfilment Centre); 440,000 sq. ft. in
Chambers 2 and 3, a small portion of which is
also utilised by Newark CSC.
o Reverse Logistics (Returns) and Spares; 220,000
Chamber 1 Chamber 2 Chamber 3
sq. ft. on the ground floor of Chamber 1
o Customer Repair Centre; 184,000 sq. ft. on the
mezzanine in Chamber 1.
How we currently do things - CSCs o 22 Customer Service Centres o 5m+ home visits per year o 250 Specialist Engineers o +250,000 white goods repair in home o 7am to 9pm delivery slots o Enhanced Service Capability o Detailed Property Requirements
Repair; Service; Install; Upgrade; Membership
Ben Terry - Introduction
Career History:
15 years experience in site location / retail analysis
GeoBusiness Solutions – retail & leisure consultancy
PinPoint Target Marketing – retail & leisure geodemographic targeting in New Zealand
JCDecaux UK – targeted outdoor media campaigns
Dixons Retail / Dixons Carphone – site location planning & performance review of store portfolioBen Terry - Introduction Career History – early starter
Ben Terry - Introduction
Career History- keeping up-to-date
1985 1996 2007
1986 1997 2008
1987 1998 2009
1988 1999 2010
2000 2011
1990 2001 2012
1991 2002 2013
1992 2003 2014
1993 2004 2015
1994 2016
1995 2006 2017
2018Ben Terry - Introduction Career History – catchment knowledge
Retail Destinations
Detailed Store Analysis Performance Analysis– review of each individual store’s sales performance within the portfolio
Location Planning Overview Objective Understanding our locations to reflect customer behaviour, across multi-channel, to shape portfolio and catchment strategy. UK & Ireland Store Network Over 1,000 retail stores 313 x 3in1 stores & 650 Carphone Warehouse (standalone locations)
Currys PC World & Carphone Warehouse – a
portfolio journey from the start of optimisation
2010
Currys
PC World
High Street
portfolioCurrys PC World & Carphone Warehouse – a
portfolio journey to the current day
2018
3in1 stores
3in1 stores
Carphone
Warehouse
portfolio
21/01/2019Assets and Estate
Understanding ourselves
Dixons - Contribution vs Property Costs
4,999
4,499
3,999
3,499
Branch Contribution
2,999 UK’s Largest Electrical Store
2,499
1,999
1,499
999
499
London’s Premier Shopping Street
(1) 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500
Property CostsUnderstanding ourselves
CPW - Contribution vs. Property Costs
1,600
1,400
1,200
Branch Contribution
1,000
800
600
400
200
Oxford Street 262
Oxford Street Centre Point
-
-200
Birmingham Grand Central
-400
Property Costs
Page 23New “EVO Format”
Shopping Centres High Street
Retail Park Stores
Arterial Routes
Property Assets & Estate Department Overview
Objective
To deliver a full property management service for all of the Groups property interests in the UK & Ireland aligned to the businesses overall
UK & Ireland aligned to the businesses overall strategy.
UK & Ireland Property
Over 1,000 retail stores (313 3in1 stores & 650 Carphone Warehouses)
Over 50 Non- Retail properties (inc. Warehouses, Support Offices & Call Centres)
Over 60 Non-Trading properties (inc. vacant and sublets)
Property Costs
Page 28Property Assets & Estate Department Overview
Estate Management
Rent/Property Cost Payments.
Lease Administration:
o Change of Landlords.
o Landlords consents.
o New leases, disposals, changes in rent etc.
General estate management issues
o Squatters/Travellers in vacant sites
o Ensuring stores ability to trade at all times - landlord and adjoining occupier liaison.
Cost Management
Rent Reviews – managed both internally and outsourced
Lease renewals:
o Around 80 renewals a year
o Typically outsourced
o Maximise future flexibility (e.g lease breaks & favourable alterations clauses)
o Minimising future cost exposure (service charge exclusions)
Page 29Property Assets & Estate Department Overview
Cost Management continued
Business Rates
o Outsourced (payments and valuation appeals)
o Rates mitigation on vacant premises
Service Charges:
o Member of the PMA - lobbying RICS on new Service Charge Code
o Seeing significant inflation due to Landlords proposed investments in shopping centres and retail
parks
o Significant time invested in negotiating favourable exclusions in new leases
Closures
All stores reviewed at lease expiry having regard for:
o Profitability and sales performance
o Rent forecast
o Other stores in the catchment – ability to transfer sales ?
o Dilapidations liability
Page 30Property Assets & Estate Department Overview
Disposals
A number of vacant stores, offices and warehouses on the market
Preference is always to Surrender but Assignments & sublets considered subject to covenant
Always seeking opportunities to minimise exposure to costs (i.e. temporary or charity lets)
Acquisitions (New stores & relocations)
Deliver incremental sales/profit
New stores
o White gaps areas of low market share
o New developments
Relocations
o Forced (e.g. hostile notices at lease renewal) – business protection
o New developments - changes in retail pitch
o Upsizes & downsizes
Page 31Property Assets & Estate Department Overview
Non-Retail
Includes warehousing & distribution, support offices, call centres & car parking.
Warehousing & distribution is an area of growing importance as the business develops its
future supply chain strategy
Warehouse market becoming increasingly competitive due to the growth of on-line.
Sublet Portfolio
A number of sublets (e.g. residential upper parts & sublets of surplus space)
Always seeking maximise income and minimise costs.
A number of rules & regulations that must be adhered to, particularly in relation to
residential property
Page 32Project Berlin
Following the merger, we announced a major property initiative to reduce the number of stores in our
portfolio through a series of store closures and refits of the remaining stores.
We are now 95% complete with only a handful of store closures and refits remaining
The rationalisation of our property portfolio has created a truly 3 in 1 estate that reflects the future strategic
role of the store and enables stores in the right market locations for our customers
92 • 92 store re-development programme to transform the Currys and PCW portfolio and enable a
store re-development ‘3in1’ estate to meet the needs of our customers
programme
• Closure and disposal of 132 stores across the Currys PCW and Carphone
132 portfolio
store closures
• 91 Dixons (Currys PC World) stores
• 41 Carphone Warehouse
• 100% transfer of sales from the closure store into the new ‘3in1’ re-developed site
100%
Trade transfer
• £70m refit costs (including 28 new mezzanines)
£150m
• £80m lease exit costs
Investment
Page 33Project Berlin
Latest Position
We have spent circa £80m to dispose of over 80 stores. This has removed £205m of future property cost liability (to
£205m of future property cost liability (to lease expiry)
£49m budget left to dispose of the remaining 52 stores that have a current future property cost liability of £94m
future property cost liability of £94m
Benefits
We have delivered a £50m p.a. rent & rates saving whilst retaining 100% of our sales.
sales.
Page 34More than just shops!
Page 35Guessing the future
Innovation cycles have massively reduced in the digital
environment and create a truly unpredictable future
LEAD TIME BEFORE REACHING 50M ACTIVE USERS
38 27 17 12 4 3.5 1.5 0.3
YEARS YEARS YEARS YEARS YEARS YEARS YEARS YEARS
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