The successful merger of Dixons and Carphone Warehouse is a reminder to all retailers of the importance of executional excellence.
Mergers frequently have a habit of failing to deliver the promised benefits.
Much-vaunted synergies get bogged down in treacle, culture clashes force managers to take their eyes off the commercial ball and unexpected nasties crawl out of the corporate woodwork.
However, Dixons Carphone, created last year when the electricals giant and mobiles specialist tied up, seems to have avoided the pitfalls.
Dixons Carphone celebrated a happy Christmas as it successfully navigated “roller-coaster” conditions sparked by Black Friday.
There was plenty of scepticism at the time of the retailers’ merger.
The pairing was portrayed in some quarters as a sign of weakness. The foundation on which it was built, the idea of an increasingly connected word, was dismissed as airy-fairy.
But there’s no arguing with the numbers. Like-for-likes rose at Christmas, margin held and profits should come in ahead of consensus.
Not all retailers operate on a vision of the future like Dixons Carphone’s, but the retailer’s success holds one general lesson – the importance of executional excellence.
From top to bottom Dixons Carphone shares a common sense of purpose and its strategy and Black Friday tactics were successfully enacted where it really matters – including on the shopfloor.
A few years ago stores were seen as one of Dixons’ weaknesses. Today they have been turned to competitive advantage and made relevant to changing shopping habits – an inspiration to others still finding their way in uncertain times.
Robust negotiations between retailers and suppliers are commonplace, but some of the stories about buyers’ behaviour that featured on Monday’s Panorama programme on Tesco sounded more like muggings.
It’s a pity, because the bad image such practices create affects retail more widely even though the picture is often very different.
That was clear the same day the programme aired when luxury organisation Walpole held its Brands of Tomorrow event. Retailers such as Harrods boss Michael Ward were among those mentoring entrepreneurs aiming to build great brands that could become suppliers themselves.
It’s not just at the upscale end that this happens. The big grocers do it too, for instance by sourcing locally. They have also been at the forefront of fostering technology start-ups.
There should always be some professional adversarialism between retailers and suppliers.
But as factors such as product exclusivity and digital innovation increasingly provide retailers with a competitive advantage, the proverbial win-win relationship with suppliers will become more important.
Muggers need not apply.
- George MacDonald, Executive editor