Dixons Carphone’s brands are strong enough to thrive together

There is actually very little concrete that we know about the Dixons Carphone merger beyond the headlines: a deal to bring together two of the biggest UK retailers to great a retail behemoth worth £3.8bn and with almost 3,000 stores across the UK and Europe.

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The nitty gritty is still to be ironed out. Whose head office will they move to? How will they integrate divisions such as HR, marketing and finance? Which areas of the business will be hit hardest by job cuts? This is the stuff that causes mergers to fly off route despite the best attempts by senior management to flag up “harmony” and a “painless transition”.

Of particular interest is what will happen to the new entity’s brands. Three retailers all operating under one roof with broadly similar offerings in devices, connectivity and customer support services sounds like a recipe for confusion among both customers and suppliers.

Dixons Carphone has almost said as much itself. There are no current plans to “throw the baby out with the bathwater”, as new deputy chief executive Andrew Harrison put it, and imminently get rid of any of its brands. However, there will be a review to see what the best way forward is to ensure Dixons Carphone remains relevant in a rapidly changing retail environment.

A quick look at YouGov’s BrandIndex scores for Currys, PC World and Carphone Warehouse show that Carphone Warehouse is easily the weakest of the three brands. It lags behind the others across almost every metric, from quality and satisfaction to reputation and buzz (a measure of the positive and negative things said about a brand).

However, all three have seen statistically significant increases in their scores over the past year.

That is testament to the changes both companies have put in place in recent years to improve customer satisfaction and brand perceptions. At Dixons, its KnowHow customer support service is proving popular with customers looking for help with setting up new devices and getting the latest content on to them. It also now judges sales assistants’ bonuses not on their sales but on customer satisfaction levels.

It is much the same scenario over at Carphone Warehouse. It has even taken to highlighting its service credentials in its marketing, with its latest campaign promoting its price comparison tool PinPoint.

Both are placing increasing emphasis on the service they provide to differentiate from other electronics and mobile retailers and that appears to be paying off.
Speaking to the press this morning (15 May), Dixons Carphone’s chief executive Sebastian James said both firms’ satisfaction scores are among the highest they have ever been.

They also have have, as Harrison puts it, almost ubiquitous brand awareness. YouGov figures show all three have in excess of 91 per cent awareness among the general public, with Carphone Warehouse the highest at 92.8 per cent.

With all three brands in the ascendency and brand awareness so high it would seem that any review would point to continuing to run all three brands. There is clearly appetite for them from the buying public and enough of a differentiation between Currys and PC World for both to operate.

Carphone Warehouse is also strong enough to be put in Dixons’ stores without diluting the brand or causing confusion. People know what these companies offer and inserting Carphone Warehouse into Currys and PC World will be an instant way of communicating that the two are moving into mobile and connectivity without having to launch a huge marketing campaign explaining the move.

It might be a slightly different story for KnowHow and GeekSquad, which are similar services that will end up occupying each others’ turf when the two companies merge. Hopefully this is what Harrison was talking about when he said Dixons Carphone would evaluate its brands’ futures and Currys, PC World and Carphone Warehouse won’t be disappearing from our lives any time soon.

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