Revolution in retailing
A Dixons Group case study

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Page 3: SWOT analysis

Dixons Group 5 Image 2While Dixons is the market leader in the UK retailing electronic and electrical market it cannot afford to be complacent. The business has progressed through the acquisition and development of new businesses. However, Dixons needs to maintain its competitive edge by capitalising on current trends and creating a cross brand infrastructure that can accommodate new services in order to meet customers’ expectations.

The aim of the Dixons Group is to provide unrivalled value to its customers through the range and quality of its brands, competitive prices and high standards of service.

A SWOT analysis is a useful planning tool. It sets out to focus on the Strengths, Weaknesses, Opportunities and Threats facing a business at a given moment. Carrying out a SWOT analysis requires research and exploration of an organisation’s current and potential future position. It is used to match an organisation’s strengths and weaknesses with the external forces in the business environment.

SWOT analysis for Dixons

Strengths

  • It is the leader in its market and 2-3 times larger than its nearest UK competitor.
  • It enjoys the economic benefits of a large organisation with the competitive advantage of different brands, allowing diversity in proposition.
  • Its scale and financial strength gives it purchasing power, placing it at the leading edge of systems, products and discreet brands.
  • Its entrepreneurial culture breeds enthusiasm and competitiveness.
  • Its national direct fulfilment operation and supply chain infrastructure create a ready made framework for direct and e-commerce sales delivery.

Weaknesses

  • Because of Dixons’ size and perceived power, its competitors and suppliers regard it as much more of a threat.
  • Also due to its size, the problems of the entire industry are reflected in Dixons and reported by the media.
  • Its leading position in many of its markets means that its opportunities for further expansion by acquisition within its present sectors are limited.
  • Many of its staple product lines have gone from luxury to differentiation in the marketplace.
  • Although it buys products internationally, it has no overseas retail outlets.

Opportunities

  • The key opportunity for Dixons is the emerging convergence of technologies, such as the Internet, telephony and digital television.
  • The Internet has increased opportunities to communicate with customers and to create new channels to market for many of its products. This will help Dixons maintain a competitive edge

Threats

  • The Internet is perceived as a potential threat to the traditional retail industry. It has the capacity to reach huge numbers of customers and is a route to the market, which is potentially lower in cost.
  • Price deflation in most product categories continues to squeeze margin levels.
  • Potential European legislation requiring retail co-operation in the recycling of electrical products could considerably increase Dixons’ costs of sales.
  • Potential UK introduction of a digital TV licence and the continuation of analogue broadcasting could restrict the take-up of digital TV.

Dixons Group | Revolution in retailing
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