Pain turns to agony for electricals

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The Independent Online
The grim announcements from Amstrad yesterday and Rumbelows on Tuesday show that the pain on the high street is turning into agony for the electricals sector.

Sir Colin Southgate, chairman of Rumbelows-owner Thorn EMI, said: "There's no real money to be made out of the retailing side. The market is over-supplied. There comes a time when you have to say, enough is enough."

The Amstrad and Rumbelows announcements follow a profits warning from Comet, and Dixons crying "foul" over alleged uncompetitive practices by the regional electricity companies.

John Clare, chief executive of Dixons, says: "I expect the shake-out to continue. Possibly one of the electricity companies might decide the fight is not worth it."

The main problem for the sector has been the double whammy of recession and a flood of extra capacity. The regional electricity companies, flush from the excitement of privatisation in 1990, have been busily building retail divisions, while groups such as Comet and the Dixons-owned Currys chain have also been adding new superstores out of town.

Tempo, an independent group, is also growing and Thorn EMI, still bloody from its failed Rumbelows battle, is keen to expand its Crazy George format of stores that specialise in the rent-to-own method of paying for consumer electronics and furniture.

Nick Hawkins, retail analyst at Kleinwort Benson, identifies another problem, the lack of a blockbuster product."Electrical products suffer fast price deflation and you have only to look at sales of camcorders and video games to see what can happen." Dixons' results last month showed that sales of games consoles slumped by more than half last year and camcorder sales fell 22 per cent.

Amstrad confirmed the trend yesterday when it announced that its "new" products will be variations of the fax, personal computer and cellular phone.

Most industry experts expect further casualties on the high street.