Currys customers have been spending less and relying more on credit to make big purchases as they grapple with the cost of living crisis.
The UK’s biggest electrical retailer said shopping trends were mixed, with some customers spending less and trading down, meaning they were opting for less expensive models to stretch their budgets.
“And they’re certainly looking for a deal, as we saw during Black Friday,” Currys’ chief executive, Alex Baldock, said on Thursday.
However, he said customers were shelling out more for tech purchases than they were before the pandemic. “That, we believe, reflects the value of how technology plays a more central role in people’s lives to keep them connected, productive, healthy, entertained and all the rest,” Baldock said.
Meanwhile, the energy crisis has led customers to consider buying more efficient models of energy-intensive items such as washing machines and tumble dryers, even in cases where they are more expensive.
“People are taking a view of the running costs of some things, as well as the upfront costs,” Baldock said. Higher energy bills have also meant that energy-efficient products such as air fryers, microwaves and heated blankets have been “flying off the shelves”.
More customers are using credit to delay payments for major items. About 17% of purchases at Currys are now made on credit, with many customers opting to delay payment by nine months, which Currys currently offers on any item over £99. Last year about 12.1% of its sales were made using credit.
“Credit has obviously come into its own in the cost of living crisis,” Baldock said. He said the trend was “good for customers”.
Bosses at Currys, which formerly also traded under the brands PC World, Carphone Warehouse and Dixons, said they were keeping “a very close eye” on defaults, and customers who might be at risk of falling behind on payments.
“We’re not seeing any signs of stress,” Baldock said. “Of course, customers are more hard-pressed, but … we’ve been very careful in how much we lend them.”
He added: “We are so cautious precisely because we don’t want to come within a mile of customers getting into trouble on credit. We want to help customers afford the technology they want.”
Currys swung to a £548m loss in the six months to the end of October, having reported a pre-tax profit of £48m a year earlier.
While the company was hit by a small slowdown in sales, particularly across its international business, the largest impact was from a one-off writedown it was forced to make on the value of its 2014 Dixons Carphone merger.
That writedown is the latest casualty of the government’s disastrous mini-budget in September, which caused interest rates to surge, and affected the way Currys accounted for the value of the business on its balance sheet.
Baldock said the company was well positioned to weather the economic downturn. “The future is obviously uncertain but this is a resilient business now, well set, we believe, for long-term success. We’re not counting on any imminent improvements in the macro any time soon. We’re planning very prudently.”
