Whatever happened to Dixons? The electrical retail group, once a leading brand which held the City in thrall (and in pocket) with its audacious acquisitions strategy, is now but a dreary shadow of the former self of 20 years ago. Is there any way back?
There is an inviting parallel here with that other overblown high street brand of yesteryear: the Marks & Spencer of Sir Rick Greenbury, back in 1999.
Like the Dixons of today (or DSG International as it is uninspiringly known), M&S had grown bloated and complacent on years of apparently effortless expansion at home and abroad. The warnings signs were there for anyone who cared to spot them: Hennes & Mauritz, Next, Gap. But so sublimely confident was the M&S management in the infallibility of its homogeneous one-fashion-fits-all middle market offer that it did not. And suffered the dire consequences.
In similar fashion, DSG finds itself overextended abroad, particularly in Italy and France; while it has been thoroughly outclassed at home by changing retail patterns. The once formidable management culture embodied in Sir Stanley Kalms and latterly John Clare underestimated the impact of the internet retail revolution on its high street estate. Having been caught off guard, DSG International’s belated response is widely regarded as lame and defensive.
Famously, after many years in the retail wilderness, M&S has bounced back to fame and fortune under the stewardship of Stuart Rose. The question is: can John Browett, chief executive designate of DSG International, pull off a similar miracle?
First of all, it is to the electrical retailer’s credit that it has gone for an outsider – and one who comes from the very best school of retail at that. DSGI’s strategic problems are of a depth that makes it unlikely any insider candidate would have had the resourcefulness or courage to tackle them with conviction.
Further, Browett not only comes from Tesco (he was operations development director before he was unceremoniously parked on six months’ gardening leave), he also has a retail pedigree particularly well honed to DSGI’s present pressing requirements. More than anyone else (fairly or unfairly, since these things are usually a team effort), he is associated with the success of Tesco’s online retailing operation, tesco.com, which is now a £500m business in its own right.
A tale of two whizz kids
In some ways the appointment of Browett invites comparison with the equally spectacular poaching by M&S of Steve Esom from John Lewis’ Waitrose. Both are relatively young whizz kids, with significant online experience, snatched from two of the UK’s most highly regarded retail operations. But there the comparison must end for now.
Esom’s task at M&S is much less daunting than Browett’s at DSGI. That’s not to belittle Esom’s skills, but to point out that he arrives at a company where Stuart Rose has already done much of the back-breaking work. Where Esom can help is by adding some finesse on the food retailing side. For example, M&S conspicuously lacks an online food retailing service; Esom played a major role in the development of Ocado.
So little time, so much to do
For Browett, the problems are only just beginning – with the length of his gardening leave. Tesco is known to be a stickler when it comes to enforcing severance terms. In this particular case, it has every reason to be more curmudgeonly than ever. Tesco must be considered DSGI’s most significant up-and-coming UK rival. Browett, as one of ceo Sir Terry Leahy’s most favoured ‘sons’ will have been party to the company’s topline thinking on how to clean up in the electricals market. Most peeving of all, he has precisely that online experience DSGI so desperately craves and that Tesco would itself have been wishing to exploit.
But waiting for its new ceo is one luxury DSGI can little afford. The lateness of its commitment to online is understandable, given its traditional high street overheads, but hardly excusable for all that. All right, for a long time online retail margins were flaky to say the least; but Dixons dragged its feet while some of the major supermarket chains were prepared to embrace the risk.
When, at last, DSGI was forced into action, the result had every appearance of the horse designed by a committee. Currys.digital is, frankly, a bit of a camel; and Dixons, as the online brand, has had none of the traction you might associate with Amazon (despite the fact that the online giant has no particular heritage in the brown goods area).
And as if sorting out this decidedly underwhelming brand makeover were not enough, Browett will find himself simultaneously distracted by equally pressing alternative issues. Should DSGI continue its advance into Russia with Eldorado? How much support ought he to give to the failing UniEuro brand in Italy? What about spinning off PC World, as the City would like?
Let’s hope Browett turns out to be DSGI’s Stuart Rose, rather than its Roger Holmes.