Page 5: Dixons xL
Since the first Dixons store was opened in 1937 the range of products has grown enormously. However, the size of stores has not grown in the same proportion, and customer choice in individual stores has been limited by the space available for display. Dixons therefore is now piloting a new format of store which offers a much wider range of products under one bigger roof.
Dixons xL builds on the best in Dixons Group. It began by comparing the most successful product ranges in each chain with a traditional Dixons range. Where research showed likely strong demand, new product lines were added into the bigger xL space and existing ranges expanded to offer customers greater value and choice in one location.
Bigger retailing spaces also enable significant store design changes to showcase the latest retailing concepts. xL stores feature large-scale displays, increased interactivity and special promotional areas, adding excitement and interest to the shopping experience.
Strong relationships with existing suppliers keep xL stocked with the latest 'must-have' technologies, but Dixons has also pioneered new partnerships. Small specialist 'stores-within-stores' add variety and increase the number and type of customers.
Dixons research has shown that there are tremendous economies of scale to be gained from operating large high street outlets like xL. The following illustration shows how the rent per square foot is slashed as a result of trading on such a large scale. Compare the rent per square foot at 5,000 sq feet with 35,000 sq ft.
A number of different locations were analysed, and locations were chosen which offered a combination of beneficial factors, including for example shorter than normal leases which reduce the risk associated with introducing the new format and high levels of local economic activity, which increase the population of high-tech consumers. As with Electro World in Budapest the first new Dixons xL store, in Cardiff, exceeded expectations when it opened in August 2002. More new stores have since opened with the largest yet, in the refurbished Bullring shopping centre in Birmingham, opening during August 2003.
Using the new xL format Dixons has significantly lower rent per square ft, while at the same time providing the widest consumer electronics range proposition. If the pilot proves successful, it is likely that more stores will trade in the xL format, offering more space in fewer key locations, both improving profit margins at store level and, potentially, offering cost savings through a reduction in the number of smaller stores.