German electronics giant Ceconomy benefits from its increasing range of services, such as repairs and subscriptions. The parent of MediaMarkt and Saturn is also launching its own marketplace.
Holding up well
Where can profits be made in times of cost inflation and declining purchasing power? By offering solutions that require as little inventory as possible, Ceconomy has found out. The German electronics giant sees strong growth – and even more potential – in a service offering and the platform model.
Ceconomy is holding up well in the challenging environment and says to be satisfied with demand this autumn, allowing it to end the financial year at the upper end of expectations. Sales rose 3.2 % to 21.8 billion euros, while gross profit fell from 237 to 197 million euros.
The growth was mainly found in the ‘Services & Solutions’ segment, which climbed 21.6 % to 1.3 billion euros. In particular, there was more growing demand for repair services in in-store SmartBars, mobile phone contracts and warranty extensions, with services already accounting for 6.2 % of total sales. As the segment is “exceptionally profitable”, the business will therefore continue to expand.
E-commerce accounted for just under a quarter of total sales, twice as much as before the pandemic. With its own marketplace, Ceconomy aims to further strengthen that online evolution. The platform is now in place in Germany, Spain and Austria; the Dutch launch is imminent.
Still, there was also a clear recovery in the physical shops, which attracted a quarter more customers. The group is also currently modernising its stores, with the Lighthouse concept as spearhead. Those shops, four of which opened this year, are large technology experience centres.
For the coming year, everything depends on economic conditions. If the situation does not deteriorate further, MediaMarkt and Saturn count on a clear increase in profits and a slight increase in sales. If the economy gets even tougher, however, consumer electronics might bear the lion’s share of the decreases.