On the back of this week’s results from electricals groups DSGi and Kesa, thoughts turn to the imminent arrival of US powerhouse Best Buy and its chances of revolutionising the market. Best Buy is pretty much best-in-class and its touchdown here will potentially shake up the electricals establishment and set new consumer standards.
But there is also some scepticism about the degree to which the US giant will really transform the sector. In particular, some seasoned retail watchers have raised their eyebrows on hearing that Bob Willett is likely to be chairing the new business. Those with long memories are quick to bring up some of Willett’s previous British retail roles. And it’s fair to say their recollections are not exactly favourable.
First to be mentioned normally is his stewardship of Littlewoods or, rather, his abrupt resignation as managing director in 1997 after reported internal disquiet that a£100 million investment had not brought hoped-for returns.
Second, critics typically bring up the fact that five years before his exit from Littlewoods, Willett had to resign from Gateway – subsequently rebadged Somerfield – after apparently losing the confidence of employees.
Maybe it’s unfair to dredge up perceived inadequacies from so long ago, but the fact that such stories are being dusted off is evidence of how important the Carphone contribution is likely to be to Best Buy’s European performance.
It’s encouraging that Carphone finance boss Roger Taylor will be chief executive of the European enterprise and it was explicitly stated when the deal was unveiled that it was proposed that “Carphone Warehouse’s existing European retail management team will remain responsible for the day-to-day management of the new venture”.
This week’s results from Kesa and DSGi showed that European electricals retailing is a tough place and likely to remain so for the foreseeable future.
Best Buy will have to be at the top of its game to take on the incumbent market leaders on this side of the pond and, despite its present travails, nobody should rule out a revival of DSGi under John Browett – he’s only been at the retailer for eight months, so his changes have yet to show through.
The most recent Carphone update revealed a bearish outlook. Only last week, co-founder David Ross sold 15 million of his shares. He retains a near-20 per cent holding, but it’s an interesting, unanswered question as to why he sold now.
George MacDonald is deputy editor of Retail Week