With Dixons' large-format store presence and Carphone Warehouse's multiple small stores, the merger of these two dominant UK high street retailers makes sense from a pure footprint viewpoint.
For example, it gives the new company the opportunity to benefit from online sales to both sets of customers with additional services such as click and collect.
However, just because the companies have merged does not mean that the challenges both companies are facing in future will go away. The new entity will still have to develop appropriate strategies for dealing with fundamental changes in consumer behaviour – such as the explosion in online buying, decline in bricks-and-mortar retailing, and rapid growth in WiFi connectivity which challenges operator data revenue.
Our recent research reports, for example, show that 3G tablet sales across Europe in 2013 fell sharply in favour of WiFi devices, as free WiFi hotspots proliferated last year.
What does this mean for the channel, both in the UK and the rest of Europe?
One larger retailer means stronger retail power, therefore vendors and distributors can expect it to become tougher to negotiate with a company which will likely dominate the high street for technology.
And no doubt rival retailers such as Phones4U, for example, will find it harder to compete.
There is also the question of the joint companies' European operation; Dixons failed to establish a credible presence in Europe.
However, Carphone Warehouse's success should offset this, giving the merged company a better chance with its enhanced portfolio of products and services – even though the established competition is formidable.
I must add, however, that the new name, Dixons Carphone, is an unfortunate choice and hardly evokes a new start, using as it does a last-century word for a 21st century company aiming to straddle the new universe of retail, online and connected trading.
Jeremy Davies is co-founder and chief executive of Context
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