The likely tie-up between Carphone warehouse and Dixons might in future come to be seen as retail’s first big m-commerce merger.
While the deal looks as if it can make sense according to some of the traditional measurements, the background against which it should be seen is surely the dynamic of consumers’ rapid adoption of mobile devices such as smartphones and tablets.
While the much talked about internet of things, in which everyday devices of all sorts become connected, may still be in its infancy there is no doubt that people’s lives will change in ways scarcely imaginable as today’s sci fi becomes tomorrow’s fact.
And at a much more basic retail level the effects of m-commerce are increasingly evident. A TNS study in March for instance found that 32% of Britons make a purchase on their smartphones once a month.
And only a few weeks back Argos reported that mobile commerce grew by 89% last year to account for 18% of the total.
For Dixons, a merger would bring far greater clout than it has at present in the market for mobile phones and contracts. For Carphone it would allow extension into wider technology product categories.
For both it would allow end-to-end retail of technology goods and services that are increasingly seen as among life’s essentials and – assuming the nuggets of gold can be mined from the many seams of trash – access to invaluable consumer data.
Such themes featured prominently in the BRC annual lecture given last week by Dixons’ chief executive Seb James, although he was careful to make clear that his comments did not refer specifically to the potential link-up with Carphone.
James is a smart cookie who played an integral role even before becoming chief exec in restoring Dixons to form and giving it a new sense of purpose. He is now gazing into his crystal ball in an attempt to ensure that Dixons never again falls out of step with changing times.
There is too the prospect of the more conventional merger benefits: synergies and efficiencies, complementary high street and out-of-town estates – which might allow click-and-collect options to be extended– and enhanced relationships with suppliers.
While the deal may ultimately be done for very 21st century reasons, it is likely to succeed or fail on the same grounds that dictated the fortunes of 20th century mergers – the ability of the companies, in this case former foes, to genuinely meld and create a business greater than the sum of its parts.
Carphone Warehouse and electricals giant Dixons unveil merger deal
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