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?

Increasingly

complexity and cost

Have to be more than Shop Keepers

Retail supply chains

Store Same day OnlineStore

setupInstalled

Reserve &

collect

✓ ✓ ✓ ✓ ✗ ✓

✓ ✓ ✓ ✓ ✗ ✓

✓ Some ✓ ✓ Some ✓

✓ Some ✓ ✗ ✓ ✓

Diversity of goods and how customers want them

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

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

sq. ft. on the ground floor of Chamber 1

o Customer Repair Centre; 184,000 sq. ft. on the

mezzanine in Chamber 1.

Chamber 1 Chamber 2 Chamber 3

Building 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 portfolio

Ben Terry - Introduction

Career History – early starter

Ben Terry - Introduction

Career History- keeping up-to-date

1985

1986

1987

1988

1990

1991

1992

1993

1994

1995

1996

1997

1998

2012

2000

2001

2002

2003

2004

2006

2007

2008

2009

2010

2011

1999

2013

2014

2015

2016

2017

2018

Ben 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 portfolio

Currys PC World & Carphone Warehouse – a

portfolio journey to the current day

21/01/2019

2018

3in1 stores

3in1 stores

Carphone Warehouse

portfolio

Assets and Estate

(1)

499

999

1,499

1,999

2,499

2,999

3,499

3,999

4,499

4,999

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500

Bra

nc

h C

on

trib

uti

on

Property Costs

Dixons - Contribution vs Property Costs

Understanding ourselves

UK’s Largest Electrical Store

London’s Premier Shopping Street

Page 23

-400

-200

-

200

400

600

800

1,000

1,200

1,400

1,600

Bra

nc

h C

on

trib

uti

on

Property Costs

CPW - Contribution vs. Property Costs

Oxford Street 262

Oxford Street Centre Point

Birmingham Grand Central

Understanding ourselves

New “EVO Format”

High StreetShopping Centres

Retail Park Stores

Arterial Routes

Page 28

Property Assets & Estate Department Overview

ObjectiveTo 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 29

Property 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 30

Property 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 31

Property 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 32

Property 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 33

Project BerlinFollowing 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

92store re-development

programme

132store closures

• 92 store re-development programme to transform the Currys and PCW portfolio and enable a

‘3in1’ estate to meet the needs of our customers

• 100% transfer of sales from the closure store into the new ‘3in1’ re-developed site100%

Trade transfer

• Closure and disposal of 132 stores across the Currys PCW and Carphone

portfolio

• 91 Dixons (Currys PC World) stores

• 41 Carphone Warehouse

£150m Investment

• £70m refit costs (including 28 new mezzanines)

• £80m lease exit costs

Page 34

Project 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 35

More than just shops!

MOBILE1983

INTERNET1992

GOOGLE1998

iPOD2002

FACEBOOK2004

iPAD2010

GOOGLE +2011

Guessing the future

27YEARS

17YEARS

12YEARS

4YEARS

3.5YEARS

1.5YEARS

0.3YEARS

RADIO1958

38YEARS

Innovation cycles have massively reduced in the digital

environment and create a truly unpredictable future

LEAD TIME BEFORE REACHING 50M ACTIVE USERS