Dixons forget value and go for price

Well, I’ve been thoroughly enjoying the heat-and-light generated by Dixons’ latest advertising campaign. Media-luvvies have been falling over each other in their haste to write articles, arguing the toss over whether this is gutsy advertising or the desperate stance of a failing brand. And Selfridges, John Lewis and Harrods – the targets of the copy – are … let’s say… irritated.

For those of you who haven’t seen these adverts, here’s an example of one ad: "Step into middle England's best-loved department store, stroll through haberdashery to the audio visual department where an awfully well brought up young man will bend over backwards to find the right TV for you. Then go to Dixons.co.uk and buy it."

From a value proposition point of view, Dixons have obviously done their customer research, understood that the only ground upon which they can legitimately compete is price and so put this message front-and-centre of their campaign. This is, to say the least, a risky stance, not least because price competition is the most shifting of all grounds upon which to base your value proposition.

As we have always said, the value equation is Value = Benefits minus Cost (with cost including risk not just price). Dixons are clearly gambling that people will only consider price when buying their electronic goods. However, I suspect that many consumers are not only price-conscious but also increasingly risk-averse and are actively seeking the warranties, after-sales care and impartial sales advice offered by stores such as John Lewis.

Time will tell whether Dixons’ bold advertising will bring in the sales boost from the shoppers of ‘middle-England’. Some people may well be tempted but I suspect that, for many, the value equation won’t balance and the ‘best loved department store’ will therefore continue to do very well.