Memorandum submitted by DSG international
Plc
INTRODUCTION
DSG international plc is pleased to make this
submission on Digital Switchover to the Culture, Media and Sport
Committee. This is a timely and important inquiry on an issue
that will give rise to both major benefits and impacts across
all stakeholders. As the largest electrical retailer in the UK
we have an in-depth understanding of consumer behaviour. This
understanding, and the manner in which we apply our insights,
is likely to be critical to the successful take up of digital
TV. Our customer facing position will result in us having a significant
level of involvement in handling customer enquiries throughout
the entire switchover process and beyond. Our role will have a
front-line impact on the outcome of a project that will impact
consumers, broadcasters and Government. Our involvement in the
various stakeholder groups on digital switchover has also given
us experience of the implementation strategy so far and a basis
on which to offer comment.
About DSG international plc
DSG international plc is Europe's leading specialist
electrical retailer. The Group operates two divisions, mixed electricals
and computing and communications, in 13 countries. It trades through
more than 1,400 stores and employs 40,000 staff across the UK,
Ireland, the Nordic countries, France, Spain, Italy, Hungary,
the Czech Republic and Greece. The Group's retail brands include
Dixons, Currys and PC World in the UK and Ireland, The Link in
the UK, Elkj'p in the Nordic countries, PC City in Spain, France,
Italy and Sweden, UniEuro in Italy, Electro World in Hungary and
the Czech Republic and Kotsovolos in Greece. The Group specialises
in the sale of high technology consumer electronics, personal
computers, domestic appliances, communication products and related
financial and after sales services.
1. UNDERSTANDING
THE DIGITAL
SWITCHOVER PROCESS
Government strategy and timetable
In order to understand Government strategy and
keep awareness of the current UK switchover timetable, DSG international
plc (DSGi) has maintained regular representation on both the Spectrum
Planning Group and the Digital Stakeholder Group. Technical representation
on these groups from DSGi's service and distribution division,
Mastercare, has enabled both constructive comment to be input
to the evolving debate and for the business to more fully understand
the switchover programme itself.
Spectrum Planning Group—
The primary function of the Spectrum Planning
Group is to discuss transmitter related issues and the programme
of switching signals from analogue to digital. Representation,
alongside that of DSGi, is primarily from broadcasters and manufacturers.
Stakeholder Group—
The Stakeholder Group includes representatives
from all relevant industry sectors, including key consumer and
listener groups. This Group aims to raise awareness of Government
direction and thinking and give a broad spectrum of industry representatives
an opportunity to raise concerns and issues pertinent to their
area of expertise.
Involvement in advisory forums such as these
has given DSG international plc the necessary insight to develop
its business strategy to better fit the rollout of digital switchover
across the UK. Knowledge gained from involvement in these discussion
groups has also been translated into employee training and customer
facing action plans in order to prepare for the inevitable queries
that will arise both in store and over the telephone—asking
what is happening and seeking advice.
However, some frustrations and concerns have
arisen within this process as implementation nears. For example,
DSGi is concerned that the original criteria relating to the use
of the "digital tick" logo have been weakened. Early
in the campaign it was understood that the tick was developed
as a symbol to reassure consumers that the licensee had committed
to providing adequate training to its employees and accurate information
in the form of product labelling and regional digital availability.
This original credibility of the tick has now been compromised
as we understand that the BBC has been issued with a "marketing
only licence"—to which none of these stipulations apply.
If the use of the logo is truly to add credibility to what consumers
are being told then the standards that relate to its use should
be uniformly applied. If it is deemed appropriate that the tick
be used on a "marketing only basis" then the difference
in its use under these circumstances should be explained to consumers—and
made available to licensees other than just the BBC.
If these practices continue stakeholders will
lose confidence, weakening the cross-sector strength that is needed
to make switchover a success.
Consumer issues
DSG international plc continues to be actively
involved with the Digital TV Group and Digital UK, the management
group responsible for the switchover process.
Together with Digital UK the Group is working
on a trial in Bolton where 450 homes will be switched over to
digital television during October/November 2005. This process
aims to further understand the reality of switchover and gauge
the best routes through which the switchover message (and subsequent
advice) can be delivered to consumers. A critical focus of this
trial will be to understand how the targeted disadvantaged sectors
of the community can be assisted and prepared for digital.
Consumers involved in the Bolton trial will
receive written information on the scheme and an invitation to
a local road show. The road shows will further explain the details
of the trial and give consumers an opportunity to view the product
upgrade options available to them. The products distributed to
householders taking part in the initiative will be supplied by
Dixons Group Business Services, as will some assistance with basic
training on the range of digital products that will be given to
Council and Social Services employees. Our Mastercare engineers
and Nottingham Contact Centre will provide any subsequent technical
advice required both in the home and over the telephone.
In addition to the Bolton trial DSGi is working
with HM Prison Service to assess the steps needed to prepare for
switchover at its establishments around the UK. Mastercare is
assessing the transmitter and aerial issues that might disrupt
the effective implementation of switchover for HMP.
DSG international hopes to maintain its involvement
in trials and advanced switchover schemes in order to best prepare
consumers, and the business, for 2008-12.
2. SUCCESSFULLY
IMPLEMENTING SWITCHOVER
Training and consumer advice
Together with the Government and other stakeholders
we at DSGi have the responsibility to provide consumers with the
information and advice that they need in order to make informed
purchasing decisions. A smooth analogue to digital transition
will be best achieved where retail sales staff are fully aware
of the timetable for change and the upgrade options available
to consumers.
Concern remains, however, that calls upon retailers
to provide advice and assistance will go way beyond that relating
to queries at the time of purchase. The Government should recognise
the position that retailers are in and go some way to address
the drain on resources that switchover will undoubtedly exert.
With low retail prices prevalent in the industry there is little
room for costs to come from low margins.
In September 2005 the Group updated its training
package for store employees. The updated information included:
— The final timetable for switchover,
as announced by the Secretary of State.
— Important actions for store managers
to lead their teams through, such as key facts on switchover,
checking digital TV related merchandising and the appropriate
display of digital tick stickers.
— A question and answer sheet on how
to allay consumer concerns regarding switchover, and, where to
find further information.
Copies of this information, as provided to store
managers and employees via our intranet, are attached for your
information.
Sales of digitally enabled equipment
On 15 September, to coincide with the Government's
announcement on Digital Switchover in the UK, DSG international
announced that its sales of digital television receivers had topped
two million units. The Group views this growth in sales, from
a standing start in 2002, as evidence of a successful employee/public
education process. These sales have grown at a faster pace than
that of DVD players. The Group expects to sell a further 1 million
boxes this year as digital reception equipment becomes more competitively
priced in the market place. Entry price level Freeview Digital
set top boxes, for example, can now be bought for as little as
£27.99 in our Currys stores across the UK—the lowest
price anywhere.
The willingness of consumers to invest in additional
or alternative equipment to make them digitally ready will be
eased by the affordability of the options open to them. Integrated
digital televisions are now more affordable than they have ever
been before. A set can now be bought for less than £300. This
compares with a price of more than £2,000 for early models.
Currently approaching 50% of all TV sales through Dixons and Currys
(by value) are digital, and by Christmas, 60% of our television
range will feature integrated digital technology.
The Government needs to ensure that all stakeholders
provide consumers with the full range of technology options available
to them, rather than allowing the consumers' minds to be made
up on their behalf. This will ensure that no stakeholder feels
disadvantaged, leading to the withdrawal of support from the planned
switchover process.
3. CONCLUSIONS
It is vital that consumers receive a timely
message of affordability and choice in tandem with advice on when
switchover will take place in their region. Continual cross-sector
collaboration will prepare the ground for a successful switchover
process in the UK. Government should continue to foster this approach
in a way that leaves no room for vested interests and subsequent
fragmentation of the sectors.
DSGi has every intention of continuing its engagement
in this process; providing feedback to the Government and stakeholders
on consumer behaviour and any barriers that need to be overcome.
The Group will endeavour to ensure that consumers leave its stores
better informed of how switchover will affect them and will encourage
timely transfer to digitally enabled technology. We intend to
pay specific attention to those underprivileged sectors of the
community who are likely to find the process of switchover more
of a challenge. However, we respectfully ask that the breadth
of role that retailers will be asked to provide by consumers be
recognised by Government.
Should the Committee think it helpful to witness
the measures being taken first hand then they would be most welcome
to do so. Additionally, should further written or oral evidence
be required then appropriate members of our team would be pleased
to oblige.
10 October 2005
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