Timing will tell for next year's hi-tech winner

Dixons is already planning to buy what its shops will be selling in the run-up to Christmas 1996. David Bowen discovers how the company goes about selecting these products of the future

IT IS FEBRUARY, so it is time for Dixons to turn its mind to Christmas - Christmas 1996, that is. A team of the retail group's buyers has just returned from a trip to the Far East, where it has been looking at products that will hit the shelves in 18 months' time.

If the buyers are clever, Dixons will continue to dominate the consumer electronics market. If they are not, the group could head the way of Rumbelows, now closing, Kingfisher's Comet - dipping earthward - or even Amstrad, the great gizmo merchant that barely scraped into profit in the last year. Dixons itself has had a grim recession: although its operating profit held up reasonably well, it had to write off £210m on a foray into the United States, and is still finding the competition cut-throat.

Last week, Danny Churchill, Dixons' director of purchasing, was staring at a three-dimensional television. He was impressed - but he had to stand three feet from it to get the effect. He now has to decide whether this will become an essential domestic item or an eccentric footnote in the history books. Dixons pushed the personal stereo and the microwave, and made a lot of money. But it has also pushed the combined video recorder/satellite receiver - an electronic turkey that is still waiting for buyers to arrive.

The Dixons stores (as opposed to Currys, which the group also owns) are "big boys' toy shops", Mr Churchill says. The aim is to generate a stream of new products, because margins are inevitably eroded as competitors move in. This process has been particularly critical during the recession. "People had the money but there was a fall in consumer confidence," he says. "We had to give them a reason to spend it."

Tony Shiret, stores analyst with the stockbroker BZW, says the group is "very good at anticipating demand early". But it has had its share of disasters. In the early days of computers, it loaded up with stock, only to find they were out of date before they had all been sold. It has been in and out of the mobile phone market twice and was caught in 1993 by the collapse in demand for computer games.

Though an increasing proportion of Dixons' mechandise is made in the UK, the bulk still comes from the Far East. Everything must be planned far ahead, and a standard ritual has been established for most products.

For Christmas 1995, the first discussions on branded electronic goods were held a year ago, and contracts were signed in November. The own-brand line-up was finalised last month. Koreans, Taiwanese, Indonesians - even British - trooped into Dixons' suite at Caesar's Palace hotel in Las Vegas, where the Winter Consumer Electronics Exhibition was being held, and trooped out with a piece of paper that allowed them to start manufacturing. The big US shows are used for signings because they are convenient. Mr Churchill says: "All the manufacturers are there."

If the timetable is mechanical, the selection process is an art. Dixons has tentacles all over the world to pick up trends; it then decides whether or not they can be transferred to Britain. The Hong Kong office, with 50 staff, is mainly a liaison office for manufacturers but is also an early warning post. No one country is a model for Britain, Mr Churchill says, but different regions have different uses.

The Far East is useful because manufacturers are always developing new lines: they will be making one product for Dixons, and others for American, Japanese or European buyers. British buyers can look, and learn. Japan is a good early indicator for audio and hi-tech consumer electronics. Japanese companies tend to test their new products in the domestic pond and, Mr Churchill says, what sells to Japanese living in small houses will probably sell to Britons in small houses. The group has a Japanese director who acts as its ears and eyes.

Americans are the early users in computers. Mr Churchill says he decided to stock up with multimedia PCs - computers equipped with CD-Rom drives - last year because they were selling so fast in the US. Also, he points out, the very fact that a product is selling well in America means sheer volume should bring its price down.

Spotting new products is the easy bit. Knowing when to launch them is the hard task. Dixons got it right on personal stereos, microwaves and multimedia PCs. It fell to earth on mobile phones, believing consumers would take to them faster than they did and allowing service providers (such as Cellnet and Vodafone) to undercut it on the business market. It was faced with its worst nightmare - stocks that cost more than they could be sold for. It is now re-entering the market, but this time it has made sure the service providers are its chums.

The group also went into cordless telephones too early; they were just not good enough. Now, after three years' development (it works closely with manufacturers) it is ready to try again.

So, how does it get the timing right? Mr Churchill says he could see the CD-Rom coming eight years ago - but he did not press the button until late 1993. He was waiting for PCs to make their way from the office to the home - and that has happened only in the last two years.

Sometimes he is prepared to play a waiting game. The Philips CD-I, technically similar to the CD-Rom but designed to be plugged into a television rather than a computer, has failed to have a big impact since it was launched three years ago. But, Mr Churchill says, when hi-fi manufacturers start to build CD-I players rather than a straight CD deck into their equipment, the market should be transformed. That will happen soon, and he does not want to miss out.

Sony MiniDisc and Philips Digital Cassette (DCC) players have been sitting on the shelves for more than a year, with little interest shown in them. Dixons is holding tight: analysts say their real advantage - that they can be recorded and will give digital-quality sound - will eventually sink into the consumer consciousness.

Often, the trick is not to bring in totally new products but to update or repackage old ones. Dixons decided five years ago that there would be demand for "green" washing machines, and started talking to manufacturers about equipment that used less water and electricity. "The Eco range now accounts for more than half the machines we sell," Mr Churchill says.

A repackaged product that will be given shelf room this year is the small television with built-in video recorder. Amstrad launched one years ago but, Mr Churchill says, it was too early. It was only when big names such as Panasonic were prepared to enter the market that it became "respectable": when Amstrad did it alone, it was regarded as a gimmick.

Mr Churchill will not say what Dixons line-up for Christmas 1995 is, but there are clues about the way the gizmo market is moving. These are developments we can expect in the next one-to-three years:

"Communications," Mr Dixon says, "is going to be huge". Mobile phones are finally becoming a day-to-day product, while cordless phones have finally lost their annoying buzz. In Japan, personal organisers (tiny computers) are being combined with mobile phones that feed in data.

Laptop computers are spreading from the business to the home market: with a mobile phone incorporated, they will be ideal for sending letters/messages from mountain tops or pubs.

The multimedia revolution continues. Stand by for the combined television/computer, incorporating a fax machine. The television market is being expanded at one end by small sets with a host of features, and at the other by giant "home cinema" systems. Already, 40 per cent of Dixons' large sets are sold as part of these systems: they include hi-fi sound from five speakers.

Digital recording: Dixons believes the MiniDisc and DCC have potential. When they are built into hi-fi systems, consumers will realise that they are a better recording medium than the standard tape.

Three-dimensional television? Watch this space.

Start your day with The Independent, sign up for daily news emails
Sport
England's women celebrate after their 3rd place play-off win against Germany
Women's World CupFara Williams converts penalty to secure victory and bronze medals
Arts and Entertainment
Ricardo by Edward Sutcliffe, 2014
artPortraits of LA cricketers from notorious suburb go on display
News
newsHillary Clinton comments on viral Humans of New York photo of gay teenager
Arts and Entertainment
The gang rape scene in the Royal Opera’s production of Gioachino Rossini’s Guillaume Tell has caused huge controversy
music
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'