News Analysis: Dixons opens up to win customers

As Dixons reviews its comms support and prepares to rebrand, Dan Bloch charts the group's reputation and finds a firm reaching out to the media and customers.

When the Dixons Group reported last month that pre-tax profits for the UK were down eight per cent, chief executive John Clare proposed changing its name to DSG International. He reasoned that the Dixons chain - one of the group's four UK businesses besides Curry's, PC World and The Link - accounted for less than ten per cent of total sales in an increasingly international business.

Last week plans emerged to overhaul its PR support (PRWeek, 1 July) with director of corporate affairs Kai Boschmann presiding over a reorganisation of the in-house team, having joined from Burger King in February.

The FTSE-100 company has evolved from a photography studio, founded in Southend in 1937 by Charles Kalms, to a 13-country business. During that time his son, Sir Stanley Kalms - who stepped down as chairman in 2002 to hand the reins to Clare - earned a reputation for spotting trends early and leading the move to out-of-town retail centres.

But Dixons' relationship with the press has not always been rosy. In the past Kalms has drawn criticism for his combative style at shareholder meetings, while a 2003 Competition Commission investigation into extended warranties, found, among other things, that Dixons' schemes were overpriced.

The brand was hammered by the press and the Consumers' Association (CA).

Changing of the guard

Last September, the group ditched its country-specific approach and restructured into three divisions - pan-European computing and comms, UK & Ireland electricals, and international electricals. The rationale, says director of media relations Hamish Thompson, was to 'amalgamate strengths, share best practice, consolidate buying power and find structural efficiencies'.

On the media relations front, Boschmann is creating a layer of PR managers under Thompson with responsibility for the divisions. Dixons has made one internal promotion for the post of computing and comms PR manager, and aims to fill two other divisional positions and a corporate PR manager post internally.

The divisional PR managers will decide on the group's agency relationships in the UK and Europe, says Boschmann. 'We want to improve the profile and reputation of the organisation,' she says. 'I want to make the team, the agencies and the budget work much harder.'

Perceptions of Dixons are broadly in line with Boschmann's assessment.

'The City sees Dixons as a well-run operation,' says Retail Week chief reporter Neil Craven. 'It is a bit pessimistic and tends to under-promise and overdeliver. The City likes that. But margins are constantly under pressure from rival retailers such as Tesco and Argos. It needs to deliver much improved customer service. It is failing to do so despite paying lip service to achieving it.'

The Independent retail correspondent Susie Mesure says: 'Dixons is a well-known brand but its strength is diminishing as more ways and places emerge to shop for consumer electronics. And it has battled with its reputation for bad service.'

Evolution Securities retail analyst Nick Bubb suggests adopting the name change, which will be discussed at Dixons' AGM in September, is part of the drive to change perceptions. 'The name change says a lot,' he says.

'People often focus on the Dixons chain, whereas the group has pushed heavily into Europe and is very different from a few years ago. Whether it has got that message across is up for debate.' The appointment of David Lloyd-Seed as Dixons' first in-house IR director two months ago shows the group is finally getting to grips with the need to build closer ties with analysts, he adds.

The Sunday Times City editor Richard Fletcher agrees the name has been a handicap: 'It is often judged on people's experience of shopping at Dixons, which is not the best advertisement for the whole group, and is unfair given (the chain) accounts for just a few per cent of (group) turnover.'

Closed shop?

Craven says Dixons must improve its comms. 'Its corporate PR can be good, but it's a bit sporadic. It has almost become obsessed with pushing sales and not wanting people to talk to staff or directors,' he says. 'Whereas the average guy at B&Q is very happy to talk about the business, at Dixons they ask "Why should I tell you that?

Our competitors will know what we are doing".'

Blitz PR account director Jim Buchanan, who used to handle PR for Dixons' PC and laptop business in the UK, argues: 'Dixons should make itself more accessible to the press. There is a general fear within the organisation of speaking to media.'

Boschmann maintains that customer service remains 'high on the agenda'.

She says: 'We have always had a focus on service. We should share the good examples more with the media.' Boschmann adds that the group's CSR activities, such as supporting charities and consulting with the British Retail Consortium over compliance with European recycling laws, are 'probably an area we don't talk enough about'.

But she admits relations with the outside world have been cold. 'We want to reach out, have a more co-operative relationship with our stakeholders - the media and trade associations.

In the past, Dixons has taken a very aggressive stance with the media.

I am turning that around.'

Boschmann adds that Dixons has changed tack in its relations with the CA over extended warranties, making an effort to share data with the association and explain how its products work. But she is sanguine about the results.

'I don't think we can take the credit yet. We need to prove ourselves on the shop floor,' she cautions. In retail, that is what it is all about.


UK agencies:

- Financial Tulchan Communications

- Consumer Talk PR

- B2B Brazil

- Consumer AxiCom (just hired)

European agencies:

- Norway, Finland, Sweden and Denmark Burson Marsteller

- France Florence Gillier Communications

- Russia Maslow Sokur Associates

- Ireland Dynamics PR In-house departments:

- Group director of corporate affairs

Kai Boschmann

- Director of media relations

Hamish Thompson

- PA and environment - one staff

- Community relations - two staff

- Employee communications - four staff

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