Dixons v. Best Buy, & price drops18 May 2014 01:11
A few random opinions I guess.
The BB saga gave very little information about BB's skill as a retailer compared with Dixons, for the simple reason that it was always going to be very easy for Dixons to kill a handful of stores. Whatever BB did it was a simple matter for Dixons to do the necessary, with minimal impact on its business as a whole. One thing that does not say much for BB is that it had one opportunity to wrong foot Dixons, which was to have a killer online proposition. Dixons was weak on the web, and BB failed to capitalise on it.
The price drop seems to me to reflect disappointment at the rather weedy prediction of £80m annual savings, on 11bn sales, from 2017 - it's years away, there will be costs in restructure, and it's only a forecast.
That should be incidental - the co-operation on the 'internet of things' is still the big story. But if there was such an obvious mutual benefit, why not just do a deal, or set up a JV? No need to merge.
Dunstone has consistently shown he is no mug, at least he made a turn on the Best Buy exercise even if he failed to predict that Dixons would kill it, without question. Seb James has vision, for sure, and Dixons has made real progress with customer service, delivery etc.
But what is this internet of things? Cleverness doesn't equate to sales - customers need to perceive a benefit. I don't need my fridge to tell me I have no cheese, my washing machine hasn't missed a beat in 14 years so why do I need it to be connected? It's a solution looking for a problem. Does CPW really have the grip on connectiivity anyway?
I sincerely hope the deal succeeds - but if it does, it will probably because of the value Dixons Carphone can create for suppliers, who do not want to be at the mercy of Amazon and the mobile networks.
Good luck Dixons Carphone, this will be interesting to watch.