Elkjøp Nordic wins in a declining market

Despite lower revenue, the Nordic electronics chain has reduced costs, increased margins, and secured market shares in a still fiercely competitive market.

Elkjøp has a non-standard financial year. Operating revenues from May to October came in at NOK 21.9 billion, compared to NOK 22.2 billion in the same period last year. Operating profit was NOK 251 million, versus NOK 160 million in the first six months of last year — an increase of over 50%.

"Operating profit is moving in the right direction and we are gaining market share. At the same time, we are making money at a time when many competitors are running at a loss. Skilled advisors in store, combined with one of the Nordic region's largest and fastest online stores, are now truly delivering results. Our winning culture is strong and I am genuinely proud of the feedback our customers give our employees," says CEO Fredrik Tønnesen of Elkjøp Nordic.

He still sees great opportunities and is aiming for continued growth in profitability, despite the market outlook.

"The market is still tough, but we are fully focused on what we can actually do something about, and the results show that we are succeeding across the board. That gives us real motivation to keep pushing," he says.

Profitable market share gains

Elkjøp Nordic's market share increased by 1.6 percent in the first six months of the financial year. In Norway, Elkjøp has grown its market share in eight of the last ten months.

Tønnesen is confident that the industry will, in the long run, see a significant increase in sales, but that people's purchasing power is heavily constrained by the high cost of living and elevated interest rates.

"We don't expect a big increase in revenue until interest rates fall and people generally have more money to spend, but the measures we've taken are working — we are now making money while also gaining market share," he says.

Cost measures taken

To adapt the business to the lower level of activity in the market, Elkjøp has taken steps to control costs in recent years. Unprofitable stores have been phased out, and significant work has gone into reducing expenses both centrally and in stores. In addition, Elkjøp has worked closely with suppliers to achieve profitability in challenging markets.

Record sales on Black Friday

Although the half-year figures close before the year's most important sales days begin, the CEO can report strong sales in November.

"The important Christmas shopping season starts earlier than before with Black Week. This has become a campaign that both we and our customers eagerly anticipate and plan for. Without going into detail, sales have exceeded all expectations, and we set a revenue record with sales of over one billion kroner on Black Friday itself this year," says Tønnesen.

Premium products lead the growth

What people are buying — and what you might find under the tree — is increasing in price and quality. Despite the high cost of living, we are seeing strong growth in expensive capital goods and premium products. Among this year's bestsellers during Black Week were advanced robot vacuum cleaners, large TVs, and high-end hair dryers. On the wrist, many will be adorning themselves with sports watches that provide ever more information about your health.

"Norwegians love technology. On top of that, many people are busy and want to spend their time on things other than cleaning. Robot vacuum cleaners are revolutionising housework and freeing up time in a hectic everyday life," explains Tønnesen.

Going after more gamers

The gaming industry is growing, and Elkjøp is positioning itself for strong growth in the sale of custom-built gaming PCs — a market that is currently uncharted territory for Elkjøp, which is otherwise the market leader in the gaming category.

"We are now launching the concept 'BUILD', where customers can build their own gaming PC. Our experts have selected products that fit and perform well together, so the customer can focus on the experience and the end result. The main point is to lower the barrier to building a PC yourself. If you can build an IKEA shelf, you can also build a powerful gaming PC," promises Tønnesen.

The first products were snapped up in the online store, and demand has been far higher than expected. With this, Elkjøp is taking giant leaps in the battle for gaming customers, almost overnight.

"Now we will undoubtedly be the best at gaming — at every level. Competition is always fun, and now we're going to win over the most dedicated gamers," concludes Tønnesen.