Nothing is certain anymore. Commercial environments are in constant flux, with new competitors arising from unexpected channels and ways of doing business shifting to online models. The companies that are to win out are those that are capable of adapting quickly – those that are masters of uncertainty.
An enterprise has to constantly assess whether it has the best business model, the best way of delivering value to both customers and shareholders. But it takes a bold chief executive to initiate a radical change. John Clare, chief executive of DSG International is such an individual.
DSG International, owner of both the Dixons and Currys brand, has seen the writing on the wall, as far as electrical retailing on the high street is concerned, and has announced that it is to reposition the Dixons brand as an e-tailer. The 190 Dixons retail sites will be re-named Currys.digital.
The cost of high street retail space has made it difficult for Dixons to compete with online alternatives, so transferring the brand to the internet would seem a sensible way of cutting cost and utilising the brand’s high profile.
The problem is, current combined online sales of Dixons and Currys are just three per cent of turnover, and even though online sales have experienced 50 per cent growth rates per year for the last four years, one has to ask whether the rate of conversion from high street business to online sales will be fast enough. What’s more, if retail outlets disappear from the high street altogether, where will the consumer get to touch and feel the goods prior to purchasing?
Moving to an e-tail model will have significant implications for the groups supply chain. Direct to consumer deliveries will require a realignment of the distribution centre operations. However, this could offer greater opportunities to cut costs – perhaps by co-ordinating delivery to customer direct from the manufacturer. Dixons moving to the virtual world could work well – but then, it’s difficult to be certain.
Nick Allen, Editor