Tuesday 12 July 2011

Time To Step Up DSGi, For The Sake Of The Share Price

In the world of retail, there have been a couple of real world examples of what not to do. Firstly, there is a big favourite of mine, Marks and Spencer. When I say favourite, whilst I admire the shop, I refer rather to the self inflicted wound of a few years back.
M&S in my youth was a legendary shop, that even a child appreciated was a cut above the others mother dragged us in and out of. The staff were well presented , friendly and very helpful, nothing was too much trouble. But as we rattled into the ‘sophistication’ of modern retailing the management at M&S sought higher profits. The path they chose was to maintain price and decrease quality. Cutbacks in staff benefits, once lavish were enacted as well.
I first encountered this, as a shock when the changes were young. I had become a devotee of M&S shoes for work. Smart, all leather and well priced, they covered all the bases. But on this day, I couldn’t find any in my size on the shelf. Surprised, I stopped a member of staff hastening by and enquired if they had any ‘out the back’ and received the reply ‘if there aren’t any on the shelf, we haven’t got any’ and she was gone.
I had already noticed that the shoes were now of an indifferent quality but had a morsel of trust in M&S left, until this encounter with its staff. I have never bought shoes in M&S since. In fact I am very cautious about any purchase, now unable to trust the company to look after the quality angle for me.
The other high street casualty that was no real surprise was Woolworths. At its demise it was selling everything you could imagine, produced at the lowest cost and stacked, unattractively and unimaginatively to the ceiling. It had lost its way and it lost its life.
What of Dixons Stores Group though? Well, in a highly populated and competitive sector it is little surprise that it has difficulties. But, back to executive decisions; why oh why does it not leverage its strengths?
We are currently in recessionary times which puts poorly financed companies under pressure. Whether for this reason or not competitors are falling by the wayside and others such as Comet and Best Buy don’t look long for this world. But actually they are competitors for Currys, not the PC World part of the business. Think about it. When home computers first came about, there were shops everywhere springing up to sell them. Whilst Tesco, John Lewis and others still sell them, only PC World is able to claim it as a speciality. So why don’t DSGi make something of that?
What were home computers then are now more properly described as technology, fitting in with a range of other products including music, film, photography and communications. In today’s parlance these are all ‘lifestyle’ attributes.

When DSGi sell a laptop to someone, are they even aware what else goes on in that person’s house? His router, his streamed films and music. Does he have servers for these? Nope, apart from a desire to mug people for security software and insurance the customer is left to buy what he wants.
Many people are savvy these days, but technology moves on very quickly. A great deal of advice is available in magazines, which really are the modern day catalogues, but PC World stores should be addressing the ‘lifestyle’ choices and making customers aware. Information and informative displays should lead customers to browse. The store has to be a destination as much as a place to simply pick stuff up straight away.
And what the hell is the policy of the endless sale achieving? By constantly shouting about low price you focus the customer on that rather than buying products that he wants. Generate need guys! Of course, this policy of having a waving sea of gaudy banners shouting ‘sale’, ‘money off’, ‘great deal’ constantly above your head, does present an image of a store trying to emulate Woolworths in its appeal.  Not what I would do and not a store that suggests you will be well served if you enter.
More ‘what the hell’ is attached to the chaotic online arm. The website is an absolute mess, unattractive and not easy to use (but did you notice that there is a sale on?). A small incident will suffice. My brother told me that he went in search of a product and the PC World website said it was not in stock, but suggested an alternative that was much more expensive. That just breeds cynicism. He certainly wasn’t impressed.
Then there is the online only Dixons brand, competing with other DSGi arms. What? Why? This is such a no-brainer it is difficult to know where to start, so I’ll just give a summary; don’t.
There are many low price products in technology as in any field and there is no harm honestly stocking them, but generally PC World should be looking up-market and addressing ‘lifestyle’ decisions. The stores look should reflect it, the stock and range should reflect it and the staff need to be retrained to meet the challenge. PC World should be a specialist and should look and act like it too. This is the route to survive the recession. PC World should be an aspiration store.
The website, whilst requiring some work to make it usable, should just be an online arm of the stores, again rich with information on technologies and products, but supporting store pricing. If you want to order online, for delivery or to collect in-store fine, the facility should be available, but at store prices.
A separate website should be established with no obvious link to DSGi (so not called Dixons for instance) to sell kit more cheaply and thus offering opportunities to compete with the likes of Amazon.
Ultimately, stores will be most attractive to those who spend more as they are not so price conscious that they migrate instantly to the web to purchase. The more expensive, the more likely there will be a need to see, feel and touch. The staff complete the picture and give the reassurance to buy from the store.



Here is a summary of the general principles I have espoused and as knowledge is often referred to as ‘gen’ I have called them the Gen Ten.
1.       Rationalise what you sell and why
2.       Every aspect of ‘lifestyle’ should be considered and needs and aspirations met.
3.       Price for profit but not greed
4.       Staff should be educated and selected with care
5.       Store design and layout should be stylish and informative. It should encourage browsing
6.       Stocking ‘high end’ brings people in. They look at the Rolls Royce even if they only buy a Mini
7.       Separate store and online
8.       Develop more ‘in-house’ products, with an eye on quality and looking for niches
9.       Targets should always be tested against this: measure what is important; do not make important that which you measure.
10.   Have a clear company ethos and incentivise staff to do their job properly.

All this has a cost of course, but money wisely spent is money well spent. And most of the cost is remedial, putting right past mistakes, so watch out they are not repeated. To me, so much of this is self evident and yet we see the dreary ‘same old, same old’ from DSGi, with tinkering around the edges. It’s the way to survive and it’s the way to shove up the share price. (I’m available if DSGi believe I’m on to something, for a fee. Not least because I bet their internal systems and departments don’t talk to each other as partners, but competitors. Another common source of problems in large companies).

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