With Dixons large format store presence and Carphone’s multiple small stores, the merger of these two dominant UK high street retail players from a purely footprint viewpoint makes sense. For example, it gives the new company the opportunity to leverage online sales with both sets of customers with additional services such as click and collect.
However, just because the companies have merged does not mean that the challenges both companies are facing in future will go way. The new entity will still have to develop appropriate strategies for dealing with fundamental changes in consumer behavior such as the explosion in online buying, decline in bricks and mortar retailing, and rapid growth in wifi connectivity challenging operator data revenues. CONTEXT recent reports, for example, show that 3G Tablet sales across Europe have fallen sharply in favour of wifi devices as free wifi hot spots proliferated during 2013.
So what does this mean for the channel both in the UK and the rest of Europe? One bigger retailer means stronger retail power, therefore vendors and distributors can expect tougher negotiations with a company which would dominate the High Street for technology, and no doubt rival retailers will find it harder to compete, such as Phones4U for example.
There is also the question of the joint companies’ European operations; Dixons failed in establishing a credible presence, however Carphone’s success should offset this and give the joint companies a better chance with their enhanced portfolio of products and services against the formidable established competition.
Finally, the new name, Dixons Carphone, is an unfortunate choice and hardly presages a new start, using as it does a last century technology word for a 21st century company aiming to straddle the new universe of retail, online and connected trading.