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It's the battle between shop and website that has become the talk of the retail world. After retreating from the High Street to the internet three years ago, Dixons has launched a series of Tube adverts mocking the prices and service on offer at traditional stores including Selfridges, Harrods and John Lewis.
The DSGi-owned store's ads adopt the rival retailers' signature colours and fonts to state, as in the “John Lewis-style” advert: “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.”
It goes on: “Then go to Dixons.co.uk and buy it.” Needless to say, the M&C Saatchi-designed campaign has led to some tart responses blowing in from certain headquarters in Knightsbridge and Oxford Street.
Harrods has threatened legal action about the ad referring to the shopping experience beginning with an “exotic staircase” in a Knightsbridge department store where “Piers in the pinstripe suit” works. A spokeswoman for the department store described the campaign as “a low-down swipe” and said lawyers had written to Dixons “demanding that it substantiates the claims”.
Selfridges remained tight-lipped while John Lewis' spokesman said: “Our customers value service above anything else, so whilst we wouldn't normally comment on competitor advertising, we do find it a bit odd that another business would try to make a virtue of the fact that they don't have anything like a comparable service.”
But could John Lewis be missing the point? Dixons doesn't sell on the back of service. Having dumped its High Street presence — although 25 Dixons Travel outlets still exist in UK airports and DSGi also owns Currys and PC World — it is trying to tap into the spending patterns of the so-called Credit Crunch Shopper. This creature has staked out a shopping experience based on investigating big-ticket purchases in shops, then comparing prices online and buying from the cheapest possible source.
As DSGi's marketing director Niall O'Keeffe says: “There is considerable price competition in our market and before committing to a purchase customers tend to do a lot of research both on and offline. This campaign addresses that head-on.”
The retail sector is grappling over whether shoppers place such a high value on price competitiveness that customer service is becoming an anachronism and killing off loyalty. It's telling that Asda, part of the world's largest retail group Wal-Mart, is pushing the “price is everything” agenda. In its latest TV ad campaign, a shop assistant tells viewers: “I don't think you need loyalty cards, not if you've got low prices.”
That view has been spurred by the internet, according to Duncan Woolston, head of business development at The Continuity Company, which specialises in retail loyalty. “Price has become much more important in the past two years, due to the credit crunch but also the internet.
“Online prices are far more visible — it's easier for shoppers to find the cheapest price, especially with price-comparison sites that do the work for you. There are also more retailers, so an increased supply which helps make the market more price-competitive.”
But Woolston believes that the Dixons agenda, that customers no longer care about non-price factors, is wrong.
He said: “A lot of different factors keep shoppers loyal to stores. Price is not the only factor — if it was, everyone would be doing their grocery shopping in Lidl. There is still absolutely a place for mid-market and premium-quality retailers that sell products at a slightly higher price.
“But retailers have to work harder to communicate to shoppers why they need to pay a premium.
“People still buy a lot of electrical products from John Lewis because of its customer service. That kind of addition to the shopping experience will become more important, as will product warranties and loyalty schemes.”
But what do shoppers think?
Nana Veniou, 33, from Barnes, looking at laptops in Selfridges
“I shop in the exact way that the Dixons advert suggests, coming to Selfridges and PC World to look at laptops then going online to pricerunner.co.uk to buy. The only thing that's different is I'd never end up at Dixons, it's far too expensive!
I think loyalty still exists. I return to the same websites if they offer good service. If somewhere else is much cheaper, I'll switch.”
Bora Kinay, 18, a student from Swiss Cottage, just bought a laptop from John Lewis in Oxford Street
“I did some research on review sites online, then came here to buy my computer. My friends buy everything online but I couldn't be bothered to go through the hassle of searching the hundreds of sites.
"I know the internet is cheaper, but I like to see the actual product and take it home the same day.”
Lyn Riley, 63, a retired counsellor from Finchley, in Selfridges
“I've come to look for clothes. I wouldn't buy electricals here, there's not much choice — but I wouldn't buy online either, I prefer to go to a store where there's a wide selection to browse and the staff have more expertise. I suppose it's an age thing — it just feels more secure to buy from a shop.”
David Southgate, 64, from Walton-on-Thames, a contract manager, window-shopping for binoculars in John Lewis
“I always come here. The people know what they're talking about, the advice is good and so are the products. I prefer to pay more for service. I saw the Dixons ad on my way in today and it made me laugh because its website has awful prices.”
