Mounting pressures threaten electrical retail chains

Testing times for PC World and co

A BBC report has suggested that big-chain electrical retailers may be in terminal decline. Apparently they make most of their money from warranty sales and regulators are planning to restrict the sale of these things.

This move, coupled with the margin squeezing effect of something called ‘The Internet’, means that the days of pan-european electrical retail chains like DSGi and Kesa (owner of Comet) could be numbered.

While it’s unlikely to come as a shock to anyone who has even a passing interest in electrical retailing that the Internet is driving down prices, the report makes interesting viewing.

Its most glaring omission, however, is its failure to refer to the primary predator of the UK retail marketplace – Tesco. With its growing number of experienced electrical retailing executives, it’s clear that Tesco plans to use its greater economies of scale to out-compete the likes of DSGi, Kesa and Home Retail Group (Argos).

If this is Tesco’s strategy, and it’s successful, we can expect to see some significant change in the out-of-town retail environment possibly as early as the new year.

With Dixons already incorporated into Currys as a high street brand, we could see PC World go the same way.

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