Late last month, as the collective industry gathered to take in the thrills and spills of Mobile World Congress in Barcelona, news broke of a potential merger for high street giant Carphone Warehouse and Dixons Retail. Eyebrows were raised, especially considering the outcome of its ill-fated Best Buy tie-up, but if you take a step back to look at the pros and cons, you have to say it makes an awful lot of sense on many levels.
At the risk of sounding repetitive, the landscape for mobile retailers isn’t what it once was. The usually nimble and adaptable independents have to be a little leaner and meaner to take on the challenges ahead.
One threat to the third parties is potentially itchy feet on the part of the mobile operators. Last week Carphone’s CEO, Graham Stapleton, told Mobile that ties with network operators were ‘very strong’, although O2 CEO Ronan Dunne said that his firm, as well as the other operators, are always considering their distribution mix .
The key for Carphone Warehouse is to remain relevant in the eyes of its operator partners, and crucially, its customers. This is where Dixons may come in. The retailer knows that differentiation may be the key to survival and further success in a market it has dominated for the best part of two decades. Its deal with Samsung for 60 Europe-wide ‘Experience Stores’ is testament to that.
A possible merger will give Carphone the opportunity to offer its services to a whole new demographic of customer in a new setting. The company is a bona fide specialist in offering advice on mobile products and selling them, and this will appeal to Dixons.
Data, however, appears to be the real key. Being able to offer a converged solution to the customer is the biggest carrot, and with M2M quickly becoming a thing of the present rather than future, data may be the last piece of the puzzle. If Dixons can offer a package that allows a customer’s phone to talk to their television, washing machine and fridge, for example, on the strength of Carphone’s data expertise, then the sky’s the limit.
No one outside the company knows any details of the deal or how far along talks are, but if the organisations can pull something off it could be a watershed deal for the UK retail scene, and a very shrewd bit of business for both. And you can bet your bottom dollar the network operators will ‘retain an interest’ if this deal gets off the ground.