WEEK IN REVIEW ? DSGi’s dilemma

It’s hard not to imagine the past few weeks for those who oil the cogs at DSGi to have been a bit of a rollercoaster ride. Just before Christmas, things couldn’t look better for the retail group.

It had just signed a deal with Dell that would make its stores the only place to buy the vendor’s PCs on the UK’s High Street. It was the news that the industry had been waiting for, and it appeared that the likes of PC World, Currys and Currys.Digital were about to enter a new golden age, so to speak.

But it wasn’t to last.

First, Tesco announced that it was to buy PC Guys, the computer support firm started by ex-Vodafone and Amazon director Lance Batchelor, placing the UK’s largest supermarket in direct competition with DSGi’s own Tech Guys service.

Then, just as it seemed things could not get any worse, Tesco announced that it had also signed a deal with Dell – news that DSGi could not have enjoyed hearing.

On top of all that, DSGi was forced to issue a profit warning after sales of laptops and other electricals were much lower than expected over the Christmas period. The news sent its shares spiralling by 20 per cent, further compounding its discomfort at its recent removal from the FTSE 100.

It also saw Credit Suisse’s senior analyst Tony Shiret issue a warning to his clients that DSGi may have to shut as many 200 stores – just under a third of its UK outlets. However, the suggestion was vehemently denied by DSGi, with it stating it was just "speculation of Credit Suisse’s part".

However, while DSGi was having a tough time of it, not everyone on the UK High Street is suffering. Many in fact seem unfazed by the constant talk of an impending economic crisis.

Only yesterday, Samsung announced a massive expansion to its retail operations that will see it have just under 20 stores before the end of 2008.

Book retail giant, Borders also made movements into the PC retail sector with the announcement it was to begin using Tribeka’s on demand software solution to sell over 2,500 titles in a trial that will last three months.

It was also the week that Best Buy’s CEO Brad Anderson denied that his company was intending to move expand into the UK, following it increasing its shares in mobile phone retailer Carphone Warehouse. Something DSGi will undoubtedly be hoping is the case.

DSGi’s troubles are probably making many others in the sector nervous as the retail giant – especially through its PC World brand – is a barometer of the health of this sector.

The question is – to borrow a cliché from global economics – if DSGi sneezes, will the rest of the industry catch a cold?