(This post first appeared as an opinion piece for Retail Week)
Dixons and Carphone Warehouse merging is like the plot twist in season 5 of a DVD box set, when former foes team up to reboot the story.
Everything in technology is about compatibility these days. Ten years ago, at the range launches for Dixons that I’d host for journalists, the gadgets would all sit on the table like forlorn executives on the outer ring of a networking drinks party, all shiny and impressive but unable to talk to their counterparts.
Roll ahead to today and everything talks to everything. A core part of the rationale for the deal is the arrival of the ‘internet of things’, ‘things’ like fridges that talk to the supermarket and go ahead and arrange for their frost-free white innards to be filled with organic goat’s milk and vegetable smoothies.
The deal of course makes sense. Electrical retailing is a low-margin enterprise and buying power is essential to margin protection. Scale is also important, as is the ability to offer the customer online, offline and hybrid channels through which to browse and buy.
The crucial thing that has changed in the last ten years, though, is customer behavior. According to research by customer service technology specialists KANA Software, the average UK consumer is now adept at using an average of six electronic communications channels – to shop, search, share and select. Twitter, Facebook and more have created omni-channel customers, accustomed to expressing and sharing their pleasures and frustrations in short bursts.
This creates potential risks for businesses that trade in complexity (I’m thinking about technology’s potential to catalyse anguish), especially businesses that see multi-channel as selling channels rather than conversation channels – and see multi as meaning two channels (e-commerce and bricks and mortar) rather than a dozen or more (Twitter, Facebook, Instagram, Pinterest, What’sApp, YouTube, texting, Google+, LinkedIn and more).
In the last decade, as the KANA research demonstrates, the average UK household has become genuinely omnichannel, enabled, ironically, by the equipment that Dixons and Carphone have been selling them. The average home is now a sophisticated call centre. We live in an age in which our use of technology has ‘softened’ in that it is less to do with the hardware and more to do with the app-based micro-function world in which we live. Need a Dictaphone? Dowload this free app. Need to text someone on the other side of the world? Download this free app. Need a torch? Need a spirit level? We have become savvy, adept and far more multi-channel than many of the businesses that we shop with.
So the risks are clear. We talk more online, we share our views and we make decisions as tribes. We shop under the influence. ‘SUI’ is the new SEO. That’s why Facebook are spending zillions on Graph search, enabling us to mine the views of our friends – and friends of friends – to enable us to make safer choices. Being on the right side of those choices will mean being a voice in those discussions.
Back in the late 90s Dixons launched Freeserve, a free ISP, that was IPOed and at one point had a greater market cap than Dixons itself. The technology that Dixons was selling gave birth to that huge opportunity at the beginning of mass-market web use. The same thing is happening today, through free apps and social media channels, that as M&A specialists Magister Advisors put it, turn mobile networks into ‘digital drug mules’, carrying huge amounts of social data across their networks for virtually no commercial upside. As savvy customers react the experiences of their peers and use technology to share their experiences and find better deals, Dixons and Carphone need to become the world’s most social businesses, too – opinions, news, service, helpfulness, off-piste recommendations and more, 24 hours a day. It’s their opportunity (along with all the associated ups and downs that higher levels of engagement bring). If they don’t, they’ll end up as the diffident outsiders at that cocktail party – all shiny suits and promise, but none of that promise fulfilled.