Revolution in Retailing

Dixons Group plc Mastercare would help Dixons to synergy. The synergy equation The use and application SWOT analysis for Dixons INTRODUCTION develop a lead in the area of service. 2+2 = 5 signifies that a portfolio of a SWOT analysis Dixons Group specialises in the PC World was not a major competitor, of businesses is more valuable Strengths The use of technology in the retailing environment sale of high technology consumer but Dixons recognised that it had than each as a stand-alone entity, While Dixons is the market leader in It is the leader in its market and has created a massive change in expectations electronics such as domestic appliances, uncovered a formula which could because of the influence of the the UK retailing electronic and electri- 2-3 times larger than its nearest personal computers, photographic cal market it cannot afford to be com- UK competitor. about how customers expect to shop in the future. provide a successful platform for group as a whole in areas such equipment, communications products further development in the field of as management, channels of placent. The business has progressed It enjoys the economic benefits of Organisations which adapt to this different focus and related financial and after through the acquisition and develop- computer sales. Each of these organisa- distribution, customer care and a large organisation with the are going to be the ones that have an influence in sales service. The Dixons Group has ment of new businesses. However, tions, except for Mastercare, were service. competitive advantage of different the future. This case study focuses on how developed its business through a examples of horizontal integration. Dixons needs to maintain its competi- brands, allowing diversity in Dixons Group plc has built on the power of its strategy of both external acquisition They possessed similar products and tive edge by capitalising on current proposition. and internal expansion. The Dixons Internal expansion trends and creating a cross brand infra- existing brands and created new brands to services which complemented the Its scale and financial strength Group today comprises seven divisions. structure that can accommodate new strengthen its market position. existing Dixons portfolio, consequently gives it purchasing power, placing it The internal development strategy services in order to meet customers’ helping to increase market share. The at the leading edge of systems, adopted by Dixons was particularly expectations. The aim of the Dixons If some of the largest and most successful retailing External acquisition benefits of these acquisitions were: products and discreet brands. effective for developing products Group is to provide unrivalled value to organisations of twenty years ago were to be Its entrepreneurial culture breeds Dixons’ external acquisition strategy the development of the business and services where high growth is its customers through the range and compared with those of today, the results would enthusiasm and competitiveness. led to Currys, Mastercare and PC across a horizontal plane. This most likely. For Dixons this led to the quality of its brands, competitive be surprising. They would reveal numerous Its national direct fulfilment opera- World becoming part of the Dixons provided growth and enabled it development of The Link, @jakarta prices and high standards of service. examples of success, failure or transition over this tion and supply chain infrastructure Group. As a method of development, to stay close to its expertise in and Freeserve. Dixons used these A SWOT analysis is a useful planning create a ready made framework for short time period. Theory shows that organisations acquisition makes sense, particularly in electronic and electrical retailing internal developments to: tool. It sets out to focus on the direct and e-commerce sales delivery. go through periods of evolution followed by markets which are relatively mature. Strengths, Weaknesses, Opportunities the opportunity to take over a segment its markets This strategy enabled Dixons to take Weaknesses revolution. The retailing industry is about to competitor and increase its market and Threats facing a business at a over a large company which already increase its market penetration Because of Dixons’ size and embark upon the most radical process of change share given moment. Carrying out a SWOT existed in the electrical marketplace analysis requires research and explo- perceived power, its competitors within its recent history. Organisations that do take advantage of further business (Currys) and also acquire a developing the fusion of resources across the ration of an organisation’s current and and suppliers regard it as much not prepare for this process, and this may include opportunities and improve its organisation with a bright future (PC business which allowed a larger potential future position. It is used to more of a threat. many famous high street names, may not be overall competitive advantage World). Mastercare was part of Currys Dixons Group to gain from match an organisation’s strengths and Also due to its size, the problems of around for much longer. when it was acquired by Dixons. A key economies of scale and improve its move into related areas which weaknesses with the external forces in the entire industry are reflected in benefit of acquiring Currys was that commercial efficiency complemented existing markets. the business environment. Dixons and reported by the media.

First choice for Leaders in The games console and Britains biggest The UK’s largest chain The UK’s home Dedicated to the latest technology communication technology PC software specialist electrical store of computer superstores on the Internet customer support

The leading retailer of The nation-wide specialist A new, dedicated format As the UK’s largest electri- PC World incorporates PC The first fully featured Providing state of the art, consumer electronics, with high street retailer of mobile selling a wide range of PC cal retailer, Curry’s pro- World Business Direct internet service available delivery and aftersales the latest range of TV, phone and communication games console software vides a comprehensive selec- which specialises in direct UK wide. Its flotation on services for customers of video, PC, photographic and products and services. and hardware through tion of TVs, hi-fi’s, domestic sales the London Stock Exchange Dixons, Currys, PC World, communications technology stores and the Internet. appliances, as well as a of computer products to and NASDAQ will help The Link, @jakarta, and on the high street and at wide selection business customers. Each Freeserve realise its full Mastercare Coverplan. UK airports. of PCs and communication store incorporates on-site potential. Dixons Group plc products. Larger stores technical support centres has an 80% shareholding offer demonstration facili- and customer PC training in Freeserve. The Proposition

THE CUSTOMER THE CUSTOMER THE CUSTOMER THE CUSTOMER THE CUSTOMER EXERCISES

Impulsive Retailing Destination Retailing Knowledgeable Customers Communication Retailing Software Retailing • Individuals, younger, male, wanting • Families, all ages wanting choice & • Category killer, appealing to all • Individuals wanting advice. • Individuals looking for information, What do you understand by Carry out a survey to find out excitement, the value. sectors of the market. advice and an enjoyable shopping 1 6 the term retail propositioning? about Internet shopping trends. latest/newest/smartest. • Need security that products are good • Households, individuals and • Looking for best price and the experience. and prices keen. business customers. right service. • Looking for best price and the latest In your survey find out: • Looking for a deal. Describe how Dixons and • Know product they want but not the • Some customers seeking choice and popular products which are easy ¥ how many people have access • Wanting uniqueness/exclusiveness. • Small business. to find in store. 2 model. and value, others seeking technical Currys have positioned to the Internet in their homes • Instant gratification. • To meet a ‘need’ rather than a ‘want’ advice and know-how. their retail operations at and the purchase will be planned and • Desire to see latest/newest but need ¥ how many people have used • Individuals and small businesses wanti- will not be instant. security by purchasing dependable THE PRODUCT THE PRODUCT different groups of customers. ng computers and related products. the Internet to purchase • Require convenience, high quality service products with reasonable life cycle Visit the stores if necessary to goods or services. and simple methods of payment/delivery. upgradeability. Communications for the Specialist Retailer THE PRODUCT with General Appeal make your comparisons. • Few business customers, some individu- Individual What conclusions can you als. • Wide range of games consoles and Products for the Individual THE PRODUCT • New communication products computer software products. What are the advantages draw from your findings? • New technology, latest, newest and services. 3 THE PRODUCT • Stores laid out to make products of external acquisition A SWOT analysis is used model,brands, understandable deals, Specialist Retailer easy to find. • Latest and comprehensive and internal expansion for 7 variety from which to choose. • Huge choice. to match an organisation’s Products for the Home range of mobile phones. • A separate information desk. • Strong emphasis on portable The Dixons Group? • Comprehensive range with keen prices • Expanding categories as • Brightly lit colourful store to make strengths and weaknesses (take-away) products. and deals on prices/exclusiveness. technology grows. • Office communication equipment the shopping experience exciting and with external forces, • Convergence of technologies Why is it important for • Dependable names/major brands. • Products with short life cycles and organisers. enjoyable. 4 Political, Economic, Social and products. and subject to continuous change. Dixons to maintain its • ‘One stop’ electrical shop. • Retail environment supports the and Technological (PEST). • Mobile phones/organisers. Products • Brands important. @jakarta website. entrepreneurial approach Carry out a Pest analysis in each of its brands? for The Dixons Group. Its leading position in many of its Price deflation in most product by different retail propositions. may well be the key to the future of launched PC World and @jakarta sites. markets mean that its opportunities categories continues to squeeze Strategies used by Dixons to develop retailing and opens doors to an entirely Electronic retailing: 5 What are the advantages 8 “E-commerce will for further expansion by acquisi- margin levels. different customer propositions have new retail proposition. 1. allows customers to browse through of Internet shopping for revolutionise the world of tion within its present sectors are Potential European legislation been designed to help the Group’s a store’s products to gain information, the consumer? business.” Discuss. products and approaches to retailing limited. requiring retail co-operation in the DIXONS GROUP PLC before they go to the retail outlet to recycling of electrical products appeal to different groups of customers. make the purchase Many of its staple product lines have These positioning propositions are could considerably increase Dixons’ 2. allows customers to buy direct from gone from luxury to differentiation broadly related to customer, product costs of sales. CUSTOMER BASE in the marketplace. and competitive attributes. Currys, for the Internet in the comfort of their Potential UK introduction of a digital own home Although it buys products inter- example, has moved away from the high TV licence and the continuation of nationally, it has no overseas retail street to larger edge of town superstore 3. adds value to the Group’s existing analogue broadcasting could restrict HIGH AT OUT OF outlets. units in order to satisfy customer needs products and services the take-up of digital TV. STREET HOME TOWN such as a wider product range, emphasis 4. allows the Group to communicate Opportunities Retailing propositions on bulkier and larger goods and imp- with its customers before its The key opportunity for Dixons roved space for browsing and parking. E-commerce competitors is the emerging convergence of Dixons focused on individual brand In contrast, Dixons, @jakarta and The Link remain in the high street and technologies, such as the Internet, building. This positioned the retail One application of E-commerce is the Conclusion chain in relation to each other, empha- provide a more portable range of telephony and digital television. use of the Internet for business. It is sising the ability of each to meet the goods. The Internet has increased opportu- revolutionising businesses because of needs of particular consumer segments The Groups strength has come from its nities to communicate with cus- its speed, reliability and accessibility. by product and competitive attributes. New channels to market entrepreneurial approach to doing tomers and to create new channels This created a broad range of retail Building on the expertise of the business, as well as its size. It has to market for many of its products. opportunities, each meeting different Changing technologies offer opportu- Dixons Group in electronic and developed into a non-bureaucratic customer requirements, with instore electrical retailing the advantages of organisation, which is quick to respond This will help Dixons maintain a nities for moving into new fields of Access the CD-ROM... and after sales service underpinning E-commerce provide an obvious way business, but provide a threat if these to new ideas. Its group structure offers to print this Case Study, competitive edge each of the retail brands. new fields are not successful. Dixons for the Group to add value to its the potential to operate a business which find more about Dixons Threats Different store brands and different has been instrumental in bringing per- current proposition and meet changing focuses upon diversified customer and for hot links to The Internet is perceived as a methods of retailing have alterna- sonal computers, software and the customer needs. In 1997, Dixons needs in a fast changing marketplace. www.times-money.co.uk potential threat to the traditional tive meanings for customers. For Internet into the home. Shopping established both its corporate website E-commerce has placed retailing on www.mbapublishing.co.uk retail industry. It has the capacity to example, they might prefer to shop habits are changing rapidly and late and one of the first customer fulfilment the precipice of change and the Group Browse the Web... reach huge numbers of customers in one supermarket rather than night and Sunday shopping are now an websites in this country through is ideally placed to take advantage of for up-to-date company info and is a route to the market, which which customers could purchase over another. They are thus influenced, accepted part of our modern lifestyle. the opportunities that direct marketing www.dixons-group-plc.co.uk is potentially lower in cost. for a number of complex reasons, The current trend in Internet shopping 1500 lines, on-line. In 1999 Dixons and selling over the Internet offers.