I’m writing this on the day that a ‘white-goods knight’ is meeting with Comet’s administrators to thrash out a deal to acquire the bulk of the Comet business.

I’m writing this on the day that a ‘white-goods knight’ is meeting with Comet’s administrators to thrash out a deal to acquire the bulk of the Comet business.

I have a prediction: it won’t happen. The erosion in the business is so great that the cost of getting it back to where it needs to be to make money, and return value for investors, is beyond even the best exponents of turnaround investing.

Instead, the speed at which Comet will disappear from the high street will provide further proof that the retailer has gone into administration because of its long-term failure to invest in online technology, and to recognise the fact that online channels and devices have enabled today’s consumers to be much more discerning about how they buy, where they buy, and at what prices.

According to research conducted by Forrester this past summer, 54% of those questioned now primarily use online resources to research products, and 72% of that same group also complete their purchases online. In addition, consumers generated more than 500 billion impressions about products and services through social media in 2011 alone. 

While Dixons has been able to keep pace with the seismic shift in how customers purchase electrical goods – as well as the influence that social media and online tools have on consumers’ buying decisions – Comet was simply unable to keep up.

Speaking of Dixons, I have one more prediction:  the impact of Comet’s closure will actually end up being neutral for Dixons, rather than causing the ‘disruption’ that a lot of analysts are forecasting. 

In other words, I don’t believe that the closure of Comet will lead to a sudden gold rush for Dixons, as this sector has included too many retailers for years now anyway, and so the disappearance of a single player, no matter how well known, is unlikely to make any real waves.

On the other hand, Comet’s demise won’t really hurt Dixons either, as the most desirable products at Comet came with a Retention of Title Claim, which means that the manufacturers of these products have already come and taken them away.

As a result any ‘fire Sales’ at Comet are likely to feature a rather mixed bag of unwanted and unusual items, rather than the plentiful bounty that consumers might be expecting.

If anything, the fact that this market is shrinking is more likely to help the likes of John Lewis, as cautious consumers increasingly look for warranties that they can trust.

This fact speaks to the marketing power of the John Lewis Partnership, as many other retailers actually offer similar warranty protection, and yet John Lewis continues to hold a special place in consumers’ hearts.

Perhaps that’s why John Lewis has reported an 11 per cent rise in weekly sales this week. Electricals and home technology products enjoyed a particularly strong performance, with sales up 31.5 per cent compared with last year. 

While figures like these are likely to delight John Lewis, they should also act as a wake-up call for Dixons and the rest. The world of electricals retailing has changed, and businesses operating in this sector will either need to change with it or die.

  • Dan Coen, Director Zolfo Cooper. Twitter: @Coen_Dan