DTI’s drive to cut prices will fail, say electrical retailers

The Department of Trade and Industry’s attempt to push down prices on electrical goods by forcing manufacturers to supply discount retailers will leave the market largely unaffected, according to independent experts.

Specialist retail analyst Verdict Research argues that retail margins on electrical consumer goods, typically between three and seven per cent, are too tight to be squeezed further.

This is the same view held by large retailers such as Dixons and Comet.

However, campaigners claim prices will drop by as much as 25 per cent when the DTI’s order, which makes it illegal for manufacturers to refuse to sell to discount retailers, comes into force on September 1.

Verdict retail analyst Clive Vaughan says: “The only thing that would bring down prices is if worldwide manufacturers like JVC and Sony decide to take smaller margins from their products and pass that on to retailers. I don’t see why they would do that.”

In a report out this week, Verdict predicts that grocery chains like Tesco will sell the heavily discounted goods. They will sell a limited range of products like TVs and video recorders as loss leaders simply to get people into their stores.

The research body also claims that specialist retailers, like Costco, will have to stick to their existing pricing strategies of selling discounted goods on a limited range of top selling products because manufacturers will refuse to drop their margins.

However, the Consumers Association disagrees. Mark Purdy, senior policy researcher says: “Discount retailers have lower overheads and offer lower levels of after sales service, which means that they can cut prices.”

Latest from Marketing Week


Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now


Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.


From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.


Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3703 or email customerservices@marketingweek.com

If you are looking for our Jobs site, please click here