Dixons and Carphone Warehouse today confirmed their merger. Retail Week looks at the rationale behind the move.
Dixons Carphone said it aims to provide customers with an integrated offer across a range of technology, connectivity and services beyond the point of sale, enhancing the “lifetime value” of customers and creating a business-to-business service. The merger enables:
1. The retailer to offer an end-to-end proposition
The Internet of Things will lead to more connectivity of devices. Dixons is Europe’s largest retailers of electricals selling many devices that make up the Internet of Things while Carphone sells the mobile devices which are central to how this technology will operate and be controlled. This creates the opportunity to deliver an end-to-end customer proposition.
It will provide solutions for connected devices using existing services, insurance expertise, repairs, after-sales and technical support.
2. Improved scale and reach
Increasing scale by merging the operations of Dixons and Carphone will allow it to invest more efficiently in systems, employees and training to offer better service. The retailer said this is increasingly being viewed as a crucial differentiator not just by customers but by suppliers eager to communicate their new technologies.
3. Significant cost-savings
The retailer nor only has enhanced commercial opportunities but operating efficiencies. The retailers believe it will deliver £80m of cost savings each year from 2017/18.
4. A “seamless multichannel offering”
The merger enables a “true multichannel approach”, as the combined store estate will make the offer more convenient, enabling customers in the UK, Ireland and the Nordics to shop online or in-store through click-and-collect and pay-and-collect.
Combining these points with improving data speeds and the range of connected electrical devices will enhance revenue streams for the group.
5. New services to be offered
Dixons and Carphone Warehouse plan to build on their existing services through Dixons’ KnowHow and Carphone’s Geek Squad to encompass all connected and electricals products by creating an end-to-end service offer.
The offer will include product set up, delivery, support and insurance, repairs, accessories and recycling. This will drive “lifetime value opportunities”.
6. Global opportunities to be built
Dixons Carphone aims to become a global retailer through relatively low expenditure.
It will be driven by four additional revenue streams: connected retailing, services and support solutions for products, an end-to-end offer for third parties and global partnerships with third parties.
Carphone already has contracts with “blue chip” business such as Aviva, British Gas and Royal Bank of Scotland to provide services and support. It has opened 31 Samsung stores in seven countries and a partnership with Media Saturn Group in the Netherlands.
Meanwhile, Dixons has started to provide services such as delivery white goods on behalf of suppliers and is exploring the possibility of using its Hong Kong sourcing operations for the benefit of other retailers. The retailer believes the combined group can leverage these platforms and capabilities.
Carphone Warehouse and electricals giant Dixons unveil merger deal
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