Test format axed for being 'confusing' after less than a year
DSGi has closed Dixons Warehouse, the trial format that aimed to sell electricals at internet prices in out-of-town locations.

It has converted the no-frills Dixons Warehouse store at the Town Gate Retail Park in Dudley to a Currys outlet. The closure comes despite DSGi chief executive John Clare maintaining it would keep the format when it unveiled the rebranding of its Dixons stores to the Currys.digital fascia in April.

Dixons Warehouse, which launched last December, sold both white and brown goods and was supported by an order-and-collect in-store web site operation at Dixonswarehouse.com, which it has also closed down. Plans to open two more of the discount stores in the Birmingham area this year have also been shelved.

A company spokesman said: 'Dixons Warehouse has now been converted to a Currys store.' All that remains of the Dixons brand is its pure-play e-tail site, Dixons.co.uk, plus a handful of stores in airports and in Ireland. 'Given these initiatives, we concluded that a Dixons warehouse concept would only be confusing for customers,' he added.

The failed test calls into question whether retailers can successfully deliver internet prices in stores, given hefty staff, rent, distribution and energy costs. Retail Knowledge Bank senior partner Robert Clark said: 'The key point is that the traditional retail format has considerably greater overheads in terms of retail space and the costs associated with that. Presumably, Dixons Warehouse was not doing enough to roll out the concept.'

Another weakness with discount formats such as Dixons Warehouse is that they risk cannibalising sales from the retailer's existing stores in that area. 'That is the potential danger for all retailers. What you have to do is widen your customer constituency, or you will cannibalise sales,' said Clark.

IMRG chief executive James Roper said: 'Across the board, it is 25 per cent cheaper on average to sell electrical goods online, rather than in stores.'

Asked if he was surprised by the fate of Dixons Warehouse, Roper said: 'What surprises me is that Dixons did not get hold of this [online] market and dominate it five to eight years ago, before all the competitors came in and took the game.'