Dixons gears up for price war with Tesco

The Dixons Group has thrown down the price gauntlet to Tesco by unveiling a PC priced #599 to respond to the supermarket's offering of #799.

Dixons unveiled its 233MHz cheap PC on 18 July, four days after Tesco began its PC trial with Fujitsu's Pentium II 266MHz machine (PC Dealer, 15 July). The trial is claimed to have over-reached its targets and industry insiders believe it will roll out nationally, possibly by Christmas.

The Dixons Group responded with a Contessa 233MHz desktop for #599 and a package including a colour printer and installation for #699. A Dixons representative conceded: 'It's a lower spec machine supplied by Vobis, but this is not a trial, it is ongoing. Our offering is superior to the Tesco one as ours is not trialling in only two stores.'

She claimed it was simply coincidence the deal started within a week of the Tesco trial. But the move is an aggressive one, targeting even the direct channel. Terry Duddy, managing director of PC World, said: 'It will be hard to beat even through direct mail sources.'

Frank O'Brien, UK sales director at Fujitsu was in ebullient mood: 'It's absolutely mind boggling - this is the most amount of fun I've had in the industry. We put 100 PCs in the store for the first day and 91 were sold by the end of play. The next day, the store had ordered another 300 machines.'

He went on to add: 'Selling in volume works, you don't need huge margins.

It's the same old story with Dixons - too little too late. The Dixons offering is a joke.'

Peter Day, analyst at Inteco, said: 'It will look good in the window and will get people into the store, but whether it actually sells PCs will be interesting. Dixons has to continue to respond. (Supermarkets) could force it to trim its margins and it's got to offer like-for-like products at the same price or cheaper.'