Dixons Stores Group and Comet, the duopoly that effectively rules Britain's £13 billion electrical retailing sector, will this week see a powerful attack on their dominion from an online upstart.
And it comes not from yet another bunch of whizzkids with a half-formed idea and zero business experience, but from two of the best-known names in UK consumer electrical and electronics retailing. Throwing down the gauntlet are former Comet chairman Eddie Styring and Peter Hopper, Comet’s quondam commercial and purchasing director.
Their new venture, Helpful Home Shopping, is backed by the Bank of Scotland - one of Europe’s canniest institutional investors – and the duo have assembled a powerful marketing package offering household-name brands from almost every major appliance maker.
There will be no bricks and mortar presence: instead a call centre and a virtual store (www.helpful.co.uk) will sell a full range of big ticket items including freezers and refrigerators, TVs, cookers, and washing machines. Just your average everyday offering from any Comet or Dixons branch?
No, there’s a potent secret weapon. The full force of HHS’s attack on the established order comes from its plethora of free add-ons: a free three-year warranty on all white and brown goods; free home delivery; free installation; and free removal of old appliances. Worth, so Styring and Hooper claim, between £50 and £200 to each customer.
The venture will launch this week with a £3 million campaign [agency unstated]. HHS boasts that it will poach “double-digit” market share from its two main rivals. In addition, the free warranty in particular is likely to impact adversely on rivals’ bottom lines; fat margins on extended warranties often exceed mark-ups on the products they sell.
According to Sunday Business, the real significance of the venture is Styring’s successful penetration of the “notoriously close” relationship that exists between Dixons and its suppliers.
News source: Sunday Business (UK), [published 11-Jun-00]