Going for growth
A Dixons Group case study

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Page 5: Identifying consumer trends

Dixons Group 6 Image 7Consumers differ in how they purchase e.g. the best time of day to shop, the retail environment they find comfortable, the extent to which they want credit facilities, the degree to which after-sales service matters. Failure to allow for these cultural differences can be highly damaging for a new retail entrant. Retailers vary and retailing patterns differ for example, in the size and location of retail outlets and in patterns of ownership. Some markets are fragmented, with fewer dominant chains. Other markets have dominant national suppliers or producers.

Markets are highly competitive and the prospects for a new entrant vary markedly from one country to another. For example, specifications and demand for products can vary from country to country. In Italy, marble and clay floors mean that vacuum cleaner specifications are different to countries whose houses are predominantly carpeted. In warm countries, washing machines do not require spin speed drying abilities. In countries which breakfast on croissants or pumpernickel there is limited demand for toasters.

Economic development is also at different stages. Key measures include levels of home ownership and mobility as well as domestic ownership of TV sets, washing machines, video recorders, home computers and mobile phones. Some markets have much greater scope for growth than others.

Education and employment rates must also be considered. Regulatory regimes differ. A company that is looking to develop a chain of stores on greenfield sites, for example, needs to understand what legal obstacles may lie in its way. These may be insurmountable in one country, easily overcome in another.
It is vital to establish what local conditions require. A new approach to retailing may be appropriate. If so, it may be possible to import all or most of the trading practices from the main market i.e. create and develop chains of stores that take the best practices from the various formats, for example, size, layout, and product range.

A traditional and familiar approach may simply need freshening up. If so, it may be best to buy an existing market leader, brighten its image, and tighten up its operations. A highly successful national retailer may already be in place. If so, the best approach may be to acquire it and retain its identity. Profitable growth is then built around further improving its size and efficiency, identifying best practice in each national operation and examining the extent to which it is transferable to other countries.

Taking this approach, the Group’s activities can benefit from studying retail practice elsewhere. For example, which aspects of location, design, layout and facilities that make a store successful in Greece could usefully be introduced in Norway and vice versa?

Dixons Group | Going for growth