It's not the economy, stupid

Is the credit crunch hitting consumer spending? DSG, owners of Currys and PC World, reckon it is. It's blamed its profit warning today on "generally weaker consumer environments across many of our markets".
This is bull. You should never infer anything about the macroeconomy from individual company experiences. After all, Allders, Courts and Powerhouse went bust a couple of years ago during a great retailing boom. And as the late Paul Geroski showed, even deep recessions affect only a minority of firms.
DSG's problems are of its own making, not the result of the macroeconomic environment. In bleating about the macreconomy it is merely repeating the tired old bosses' ruse of blaming the economy for what is really its own incompetence.
DSG says its like-for-like sales fell 1% in the year to the 11 weeks ending on December 29. We don't yet have official figures on how shops generally fared in December. But we do for November (pdf), the first half of those 11 weeks. And they show that overall  retail sales rose 4.4% in volume terms and 3% in value, year-on-year. That's pretty healthy.
So, why did DSG do worse? Here are four possibilities:
1. DSG has a new CEO. And new CEOs like to get as much bad news out of the way as soon as possible, so their predecessors can get the blame.
2. DSG, like many retailers, has over-expanded. The BRC reports that although its measure of overall sales rose 3.1% in the year to November, like-for-like sales were up a mere 1.2%. The difference reflects the fact that new stores have opened, spreading sales over more shops. DSG has been part of this. In many towns, Curry's and PC World take sales from each other. It's no wonder then that DSG is planning to shut some stores.
3. The "retail experience." How often have you come out of a Currys thinking "That was nice. The staff were friendly and efficient and I got just what I want."?
4. Inventory policy. What were the must-have gifts this Christmas? Wiis and DSs. Could you find them in Currys? Me neither. Funnily enough, though, one of DSG's competitors - Game Group - has made big money through the cunning trick of occasionally having in stock the stuff customers want to buy. 

Comments

[kinglear]

couldn't agree with you more - this is the oldest new ceo trick in the book, and stores up some nice " surprises" when a year or so has gone by, so triggering bonuses all round. Actually, I think the gloom and doom has been somewhat overdone.

[LiberalHammer]

Agree with that Chris. DSG also appears to be suffering from gadgets being widely available for less on the internet too