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back to article Not even Comet crashing into Earth can keep Dixons out of the red

Dixons Retail has reported massive losses due to one-off charges from the restructuring of PIXmania, and a reshuffle at its HQ following the sale of its B2B reseller operation Equanet. The LSE-listed group told the City this morning that it made pre-tax losses of £115.3m in the year to 30 April, albeit narrower than the £118.8m …

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Happy

Sit back and let the comments roll in

OK, lets get this out of the way. Standard comments for articles about Dixons.

a.) I'm not surprised their sales staff are morons and products over priced but mainly the former

b.) I only go in there to show the sales droid I'm a computer whizz, aren't I clever

c.) I went in there and reset all the screen savers to a porn pic and the idiot staff had no idea how to change it back, btw. I was only three at the time, aren't I clever

d.) Any other random asinine comment about Dixon's sales staff followed by, aren't I clever.

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Re: Sit back and let the comments roll in

The staff (and their behavior) are largely a function of the company and it's policies. When Woolworth's was on the local high street, the staff looked appalling - like zombies. Must have been hell to work there.

Waitrose took the site. Some of the same people work there - now look like humans.

One reason that John Lewis is doing so well is not the employee ownership thing (directly). It's that their sales staff aren't on a commission structured to flog you stuff you don't want and they are encouraged to use their initiative to solve customer problems.

In Dixons, going off the required sales script is a "BAD THING". So you end up with a store full of people who aren't interested in what they are selling, just flogging guarantees etc. They are being paid to do this, recruited to do this, told to do this........

In John Lewis customer satisfaction is their company goal. So you end up with someone who tries to help you get what you want.

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Mushroom

Re: Sit back and let the comments roll in

Where is option e?

e) Look at a shelf of something you want which is low value, to find none of the prices in the right place. Walk out as you know none of the staff care unless its high value.

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Anonymous Coward

Re: Sit back and let the comments roll in

In the ROI, Dixons, Currys and PC World are pervasively located at all the major shopping malls. But the stores are frequently dirty, the staff indifferent and the prices uncompetitive. But they have location, and the three things you need for success in retail is location, location, location...

What they don't have is range. Any range! For instance, you will struggle to find a high-end PC or laptop, that has anything near the latest graphics, or general spec no matter how much you are willing to pay. This is a problem for me as I'm a consultant in the games and media industry.... So I'm forced to order everything for myself and clients off Amazon. The only other option is komplett but they're also short on high-end ranges.... It would help enormously if someone else dominated the market.

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Anonymous Coward

Re: Sit back and let the comments roll in

"just flogging guarantees "....

Verdad! Isn't that the truth!

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Re: Sit back and let the comments roll in

I distinctly remember a few years ago going into the massive Dixons in the Bullring Shopping Centre in Birmingham (so we're not talking about a tiddly little store here) enquiring about KVM switches. The assistant showed me the product they had, which didn't come with leads. I asked him about those and he said that they didn't stock them! I pointed out that the product was completely useless without the leads and he was completely disinterested. I've never gone into a Dixons/Currys or whatever they're calling themselves this week, since.

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Stop

Speaking as someone who doesn't know much about business,

what is restructuring and how does it cost hundreds of millions of pounds?

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Re: Speaking as someone who doesn't know much about business,

It's comprised of

1) the cost of sacking people (redundancy pay etc), and/or moving the remainder to different premises.

2) the cost of getting out of contracts (leases, agreements to purchase etc)

3) the cost of getting rid of any old/unwanted stock that don't fit with the new plan.

4) anything else your accountants can get away with so they can ofset it against tax.

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Re: Speaking as someone who doesn't know much about business,

5.) New logo

In fact, most companies forget everything else and spend all their money on that.

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Re: Speaking as someone who doesn't know much about business,

"4) anything else your accountants can get away with so they can ofset it against tax."

Not quite. Virtually all legitimate costs of doing business are tax allowable anyway, because the intention is to tax profits. However, there is a tendency to sweep all manner of things up into restructuring costs, because directors believe that "exceptional items" can be ignored, and "exceptionals" get excluded from the board's bonus calculations. That practice is well known, and is referred to as big bath provisioning, and assumes that shareholders are either stupid or powerless (which is broadly speaking true).

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FAIL

Pointless 20th Century retail clown fails to keep up with the 20th Century.

Move along there, nothing to see here...

GJC

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Happy

Re: Pointless 20th Century retail clown fails to keep up with the 20th Century.

...or 21st Century, even. I always get those two muddled up.

GJC

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Thumb Up

Re: Pointless 20th Century retail clown fails to keep up with the 20th Century.

No, I think the first one works.

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Happy

Re: Pointless 20th Century retail clown fails to keep up with the 20th Century.

An excellent point.

GJC

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Anonymous Coward

So when's the comet going to slam into Earth?

How did I miss this news?

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Holmes

Until they start realising they need show-rooms for their online business more than shops to sell things, they will fail... Sales staff need to be there to explain things and advise, AND they need to match online prices!

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Anonymous Coward

Actually their CEO/MD/whatever who was interviewed on the business slot on the Today program this morning basically said that ... they recognised that things had changed and saw their twin store/online presence as being vital since he said increasing numbers of people "browse products in their stores then order it on their smartphone on the bus home" ... he even said that reason PixMania (online only mainly targetting France) was failing was because it was online only and as that didn't match business model of the rest of the group they would have to do something about it .... didn't explicitly say "we're going to sell it" as opposed to "we need to build stores in France" but his answer to the question seemed to me to be along the "you might think so - I couldn't possibly comment" lines!

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Anonymous Coward

Given the numbers of people that work who (a) buy stuff, (b) don't have a partner at home in the day and (c) can't always have deliveries at their office, surely many of these shops would be better off just acting as a collection point for the website?

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Anonymous Coward

If they can't match Amazon....

Then why not partner up with them? Instead of trying to flog financial products i.e. overpriced guarantees or questionable insurance that looks non-claimable... Why not act as delivery points for Amazon and share a cut? The point about everyone in households working and delivery inconvenience is spot on!

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Stop

Re: If they can't match Amazon....

"Why not act as delivery points for Amazon and share a cut?"

Amazon already offer that with a lot of convenience stores, with their locker delivery. Staples tried to do that with Amazon, but for some reason it didn't work. I think the "collect from" option wouldn't produce the margins to support the stores, which needs a primary income stream, just as Tesco Direct mainly piggybacks on the grocery stores.

The real killer for brick and mortar retailers is tax. The costs of publicly accessible premises are one of the few costs that businesses can't offset against tax, and they get caned for business rates based largely on their size, rather than margins. Acting as a delivery point and showroom would incur the same tax bills as being a full service shop, but your margins would be shredded - retail gross margin on white goods is around 30%, lower on computing kit CDs and books, but Amazon manage on 26%. Factor in the other overheads of a store that aren't variable (rent, staff, energy), and you'll see that the delivery point can only work if its costs are minimal - you can't have the showroom unless you pay a lot more.

The delivery margins are such that there simply isn't the fat to support a bricks and mortar presence, because that costs, and people don't want to pay, as Comet, Jessops and HMV have already found. There's a few stores that have the location to make them viable, but too many stores simply don't cover their costs of operation. Jessops, have now gone bust twice, and some goons have still reopened a few of the stores - how long before the go bust again?

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cwm

They tell lies

Many years ago (about 14 years as it was windows 98 era) I had the misfortune to buy a computer from them. It had a modem. I asked specifically if it was a modem that worked entirely through hardware (i.e. not a "winmodem"). The sales droid said "I don't know, I'll ask the manager". Sales droid returned and said "Yes it is a hardware modem and not a "winmodem"". Guess what. They lied. The modem only worked in microsoft windows. Haven't bought anything from Dixons group since.

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Re: They tell lies

Funnily enough, I had exactly the same experience with them. It didn't exactly encourage me to go back: as it was, the only reason I went in the first place was convenience, but it's not very convenient if they lie about the capabilities of the stuff they're selling.

They did at least give me a refund, astonishingly.

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It's easy to mock the business model entirely, but what worries me is this.

8-something-BILLION of sales made in a year.

90-something MILLION of profit made overall for the whole group in the same year, not accounting for tax.

I get that you want to invest some of that sales cash back into the business, and you have to buy stock, etc. and have contingencies, but that seems a stupidly low markup overall - barely 1% after tax? Quite what are they doing to make that kind of pittance overall? And I assume that includes the online outfit too.

And if they have 38,000 employees, is that a lot? That's about £2300 profit, per employee per year. It just doesn't seem very much at all. No wonder they have to fight for custom.

And if their main rival has literally only just fallen out of the market and they can barely keep their head above water more than they used to, it doesn't bode well.

I'm sure someone will pop on with figures about IBM or somesuch making less profit, but it just occurs to me that if you're fighting that hard for such a tiny profit, maybe you're too big, or doing something drastically wrong.

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Bronze badge

Time for a change

Isn't it time for a change? It seems that stores like Dixons don't make much of an effort. They effectively sell mostly second-rate equipment at higher prices than they can be bought elsewhere. If they made an effort to make their stores interesting or amazing, even if that means doing weird science or computing demos in the store, or putting on shows of some sort, or selling cutting-edge stuff...anyway, something more than just having badly paid and poorly motivated staff slouching around or giving the customers poor advice.

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Facepalm

They effectively sell mostly second-rate equipment at higher prices than they can be bought elsewhere. If they made an effort to make their stores interesting or amazing"

It's a hard one, certainly. The capital costs alone of stocking 300 stores or however many with all the latest kit as soon as it becomes available is a huge capital commitment compared to an online business who only needs to buy in a relatively small number or even "shipped direct from our suppliers" with almost zero capital investment.

Just look at the huge range of TVs in Dixons, Currys, PCWorld, multiplied across the UK.

I don't know what the answer is, but the reason people go to a shop is to see/touch the physical goods. What happens when there's no longer a shop to go to?

A guy I knew used to deliver sofas. He was continually amazed by the numbers of people who ordered suites that didn't fit through the door of the house, or when they did were simply waaaay too big for the room. And that was people who had looked at them in a shop first.

Thanks to the distance selling regulations, if you don't like something you ordered, you can send it back. Returns will multiply 100x if/when the only way to buy certain good is on-line. That will put the costs up significantly.

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FAIL

Pixmania never made any sense...

So I'm not surprised they're a quarter down.

- Silly name obviously. Wasn't it French to start with?

- Prices were never sharp. Frequently ridiculous.

- Emails touted "4% off!!". ermmm....

I will confess to having bought, I think, a camera once. Not a great experience though.

Must suck competing with Amazon btw.

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FUBAR?

Surely being the only major electrical retailer (beyond that of much smaller chains and single site shops) left with a presence on the high street and Out of Town, can they be SO incompetent as to screw up their long term future? Even Tesco's is getting out of electrical goods apparently, so unless you want to buy from the Internet, PCurrys will be the only place to buy from soon. And if they go under, how will you buy a computer to go internet shopping with?

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Windows

Nix mania and Dick sons are a match made in retail purgatory.

Bought a Hard drive/DVD-R recording TV box from Pixmania quite a while ago, 4 attempts to get Parcel Farce to deliver it and it finally arrived with a moulded-on European plug and French documentation. An ideal present for my Mum and only 2 weeks after Xmas. Never again.

Bought a 60GB iPod from PC World donkeys ago and took out a guarantee with it for £1.99/month. 7 years later it started forgetting everything. Dixons/PCworld tech desk guy tries manfully to get it repaired under the cover 3 times. KnowHow send it back each time still screwed and after 5 weeks delay each attempt. The fine print says if they can't fix it in 3 attempts I get a new one. KnowHow says only if all 3 attempts are within 90 days. How can I get 3 repairs done in 90 days if they take over 30 days to return it each time? PCworld tech desk man slams phone down on KnowHow advisor after 30 mins trying to resolve that one...

Hello Amazon, would you like me to buy something today?

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Anonymous Coward

Suprisingly good for cheap laptops...

Being an IT monkey, I usually get asked about buying laptops for kids/students for "not a lot of cash". Thing is, for this kind of low/mid range laptop hardware Currys/PCW were in fact very competitive for HP etc against amazon and ebuye[1], with the bonus of being able to get it there and then.

[1] Do "collect at store", tell person to ignore warranty, antivirus and MS Office sales pitch...

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