Tough Competition takes its toll on Dixons Maiden Chain
The Computer World aka Tiny and Time as they were, are now on their third major rebrand as The Computer Store and with every relaunch there are store closures as shop rents and leases expire or are folded to save money. It's a sign of the company's strength that as the association with Freeserve ends, that the last recession is coming to haunt Dixons this late in the financial year.
There are 329 shops in the original Dixons chain, originally selling cameras from a single store. Since Dixons XL is running as a superstore pilot at four locations, you would expect that some smaller stores will be folded and staff moved if not laid off, if the experiment proves successful.
Companies such as Argos make for tough external competition for the group but really the greatest competition is more internal: versus Currys for audiovisual goods, The Link for mobile phones and PC World for computers. Add the supermarkets such as Tesco weighing in heavily with electrical goods in its larger stores and there's no surprise Dixons is under attack. The original chain is missing the glossy ad campaigns of Currys and PC World, which can't have helped matters with the floating shoppers.
The allegation that half the stores could close has been labelled “speculation” by a Head Office representative. One thing is true: the days of easily reliance on extended warranty is no longer a sustainable long-term tactic for any of the stores in the group. Competing on price has brought many detractors back to the stores, but this in turn eats into margins.
After the January sales end, a quiet period up to Easter sales is par for the course in the retail world, but the company must be looking for ways to convert the 40% increase in UK online shopping last Christmas, to PC World-related sites.