Carphone Warehouse 2015 Annual Report Download - page 12

Dixons Carphone plc Annual Report and Accounts 2014/15
Strategic report
Strategy and business model
10
The Merger of Carphone and Dixons brought two market
leading businesses together with an unrivalled offer for the
new connected world, as mobile, electricals and connectivity
increasingly integrate. The Group now has a unique
independent position in the UK for mobile telephones, offering
impartial and personal service via the pioneering tablet based
assisted sales tool Pin Point.
Furthermore, as evidenced by recent announcements in
Germany, the Netherlands and Portugal, we continue to be
relentless in managing our business portfolio, focusing on
territories in which we are the market leader and growing
market share.
This enables us to drive the Group forward from a position
of strength with a focus on four strategic priorities. By focusing
on these we can deliver not only a better business for our
customers and colleagues, but also better returns for
shareholders.
The strategic priorities are:
1. Continue to enhance and drive successful
and sustainable retail business models in a
multi-channel world;
2. Complete the integration process and achieve
our synergy targets;
3. Leverage our scale, our knowhow, and our unique
asset base to drive growth in new product areas
including growth in services; and
4. Continue to develop the Connected World
Services model and establish it as a material
contributor to earnings.
Looking at each of these in turn:
1. Continue to enhance and drive successful
and sustainable retail business models in a
multi-channel world
The way in which customers shop continues to evolve.
Our customers tell us that they want advice, to experience
products and services and to ensure they are making the right
choices, particularly as these are often major purchases and, in
the case of ‘white’ and ‘brown goods’, that the customer will
own for several years. The internet empowers customers with
greater access to information including product knowledge
and price transparency. In mobile, we are uniquely positioned
in the UK to provide independent advice, meeting customer
requirements for impartiality, comparability and flexibility, both
online and in-store with the Pin Point tool. In consumer
electronics, single channel internet operators have a different
model whose principal advantage is structurally lower costs
and which have historically been able to offer competitive
prices versus store based operators. By focusing on those
aspects that we, as a multi-channel specialist, can offer
customers and suppliers we can eliminate the cost advantage
that pure play internet operators have historically enjoyed. As
a result we are able to offer customers very competitive prices
against our competitor set and still be more profitable.
There are four distinct activities that we believe are the key
strengths of our multi-channel, service-based model and which
will support our competitive advantage going forward:
i. Work closely with suppliers to harness benefits available
to our business model: Suppliers want to ensure that
customers not only choose their brands, but also
experience the benefits of the latest products. As a
multi-channel operator we work with our suppliers to
ensure we can explain the benefits of these products and
demonstrate them to customers in our stores and our
suppliers support us in this work in a variety of ways.
ii. Focus on complete solutions for customers: The Pin Point
tool enables the personalisation of the mobile customer
experience. Using tablets in store, we ask customers a few
simple questions to help them find the right deal. The tool
will identify the preferred network via its coverage checker,
handset and operating system, check bundle options
including data requirements and ensure this is future
proofed. In consumer electronics, customers buy products
in order to achieve something, such as washing clothes, or
entertaining the children. This does not just mean buying
the hardware, but increasingly includes delivery,
explanation and peace of mind through product support
and after sales services, as well as accessories and
eventually, recycling. The conversations our colleagues
have in store with customers gives us an opportunity to
explain the benefits of these solutions and sell more of
them than our single-channel competition.
iii. Drive our service proposition: We need to be able to stand
shoulder to shoulder with our customers and for them to
know they can come to our stores and get knowledgeable
advice and great service to help them buy the right
product. They need to be confident that we will solve their
problem quickly and efficiently. Geek Squad and
KNOWHOW in the UK offer customers services and
technical support that can help them with their product
throughout its lifetime.
iv. Reduce costs: The scale of our operations across stores,
ranges, logistics, distribution, repairs and services means
that we can continually improve processes to reduce
costs. We have removed a considerable amount of cost
from the business over the last few years by making the
business simpler, easier to operate and more efficient and
we remain relentlessly focused on managing costs to make
our business more efficient.