Following the news that Dixons Retail and Carphone Warehouse plan to merge in a deal worth £3.8bn, PCR asks industry members for their reactions…
Frank Seldevig, proprietor of Your IT Studio, told PCR that Dixon Carphone’s customer service would not be enough to appeal to customers – adding that the deal hinted at deeper underlying problems.
“Every merger comes with a good argument why it should happen, but it always because one company is struggling,” he said.
“They work from the wrong business model, and in the long run they are doomed.
“All of my customers are really annoyed with the superstores because they do not know what they’re selling.
“The merger is a sign that they’re not providing the right support or products, and people are waking up to it.”
Patrick O’Brien, lead retail analyst at Verdict Research, commented that the deal’s supposed focus on offering a ‘new retailer for the digital age’ was nothing more than a “futuristic sheen” to cover up “a simple and relatively boring cost-cutting exercise”.
“However,” O’Brien added, “this does not mean that it is a bad idea.
“Lower costs mean more flexibility to react to changes in the business environment, and most importantly, more clout to fight the likes of Amazon on pricing.
“Merging the two companies into Dixons Carphone will not result in any significant differences to shoppers.
“The only noticeable benefit is that analysis undertaken by the two businesses shows they will achieve £80m of savings each year by 2017/18 – a worthy, if not spectacular, reason to merge.
“The one undeniable advantage of the merger, apart from cost cutting, will be more choice and locality for picking up Click and Collect orders.
“It could be argued that a mutual agreement could have been agreed without the need to merge, but at the very least it is a tangible side benefit, and is a relatively cheap competitive advantage over online pure-play retailers.”
Jeremy Davies, CEO and co-founder of analyst Context, similarly highlighted the positive effect the deal would have on shopping services.
"With Dixons’ large format store presence and Carphone’s multiple small store format, the merger from a purely footprint viewpoint makes sense, as it gives both customer sets the opportunity for additional services such as Click and Collect,” he stated.
Paul Heywood, director of EMEA for network infrastructure specialist Dyn, also weighed in on the merger’s effect on service offerings: “This deal means that Dixons and Carphone Warehouse are now directly responsible for one another’s customer service,” he said.
“The merger will provide profitable gains for the businesses, but only if the retailers work together to ensure that the customer experience does not suffer as a result of these two brands merging.”
Anthony Lay, owner of AML Midlands, suggested that the dilution of the brand’s offerings could open up the market for specialist independent firms.
“As a business move the merger of the two companies is a good idea, but like the Currys and PC World merger months prior, the specialism of each brand is becoming more and more murky,” he explained.
“Modern day retailers are becoming jacks of all trades and masters of none.
“The thing smaller retailers can do is concentrate on what they do best and keep at it – such as added service and support.”
“My view is that I don’t see it really affecting the small repair shops as they will offer a better level of service and quality than a chain can,” Paul Brown of Cumbria Computer Repairs added.
“In fact I would expect in some cases it will push more people to independent shops for repairs or purchases.”