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Will Dixons.co.uk triumph over John Lewis?

Dixons vs. John Lewis

John Lewis is having a tough time of it of late, as its recent 20pc slump in first-half pre-tax profits revealed. And not only does it expect things to be equally as “fragile” for the year ahead, but it has also taken issue with Dixons.co.uk’s recent adverts that appears to mock John Lewis’ middle class values.

For those that haven’t seen it, the adverts are very clever, and funny. They have created buzz and talkability about Dixons.co.uk. The new adverts encourage shoppers to go and search for the items they want in ‘middle class’ department stores and “then go to Dixons.co.uk and buy it”. They’ve clearly been designed to reflect the growing trend of consumers testing out possible purchases in-store before searching for the best bargains online to save money. Dixons.co.uk has obviously looked at the ways consumers are trying to save money in the recession and latched on to this concept for its latest advertising push.

John Lewis plans to tread carefully over the next year, and has even launched a new low cost “essential basics” range which it hopes will tap into consumers who still want to buy quality products in the recession but at lower prices. The question is however, can we expect a bumper profits announcement from DSG international  (who own Dixons.co.uk) next time round following their new advertising push? If more people are heading online to make cheaper purchases, and its advertising campaign is a success then surely the answer is a yes. Watch this space…

 

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Value brands = brand value?

Brands. The release of Interbrand’s latest annual Best Global Brands report saw brands that align themselves with value, such as Ikea, Kellogg’s and Heinz, enjoy a steady climb in their brand equity as staying in became the new going out in 2009.

Many consumer and lifestyle brands have been quick to take advantage of this opportunity in adversity by turning value into a desirable attribute. To date, 2009 has seen the growth of ‘the staycation’, ‘glamping’ and ‘credit crunch couture’ to name but a few. British supermarkets have been at the forefront of some of the most successful value-inspired PR campaigns during the recession, battling it out for the best headline-grabbing launch to meet consumers’ desire to maintain their affluent lifestyles on a shoestring budget, as the likes of Aldi’s £4.99 lobster and M&S’s ‘dine in for a tenner’ promotions hit the shelves.

And food has been one of the most hotly contested battlegrounds for value in the media in recent months. The organic food industry has recently found itself forced to protect its raison d’etre following a Food Standards Agency report that organic food has no more nutritional value than standard products.

With consumers taking more time to consider a product or service’s real value before opening their wallets, brands that align themselves with good value for money appear to be well placed to take advantage of the recession. But with green shoots starting to appear, are these brand values that will stand the test of time and maintain popularity when our purse strings, hopefully, start to loosen?

 

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Government Cuts- Lansons Update

In a word – cuts. That is the battleground on which Labour and Tories will contest the next election. Not the spurious investment versus cuts divide, the central questions will be; where to cut, who can be trusted to cut, by how much and when? In a speech last week the Prime Minister finally bowed to economic and semantic reality and uttered the word cuts. In the process he framed the political debate up until the election and thrust the Government into a political contest that many think they arrived at late and are poorly positioned to win. Pessimistic and defeatist perhaps – but not unduly so. A recent Sunday Times poll showed over 60% of respondents want to see public spending restraint, as opposed to tax rises, do the heavy lifting in reducing the public deficit. This is a significant figure and there is a belief that under George Osborne this is broadly the approach that will be adopted. It is perhaps in recognition of this sentiment that the Schools Secretary, Ed Balls, identified £2bn of cost savings from the education budget this weekend. Unfortunately for the Government a Treasury leak has fuelled stories of steep hikes in income tax down the line. On the question of where to cut the Tories have met the public mood far better than Labour. There is also a perception that the Conservatives are also more trusted to be up front and deliver the cuts. Acknowledging the need to take hard choices to repair the public finances has given Brown a more credible message. Yet his tardy and grudging adoption of the message undermines much of this credibility. With the clear blue water between investment and cuts gone, the Government try to portray the Tories as obsessive anti – statists glint in eye as they hack away at public services. The Tories’ commitment to ring fence health spending gives them some protection against this attack. More fundamentally, for voters that can spot caricature there is a risk to Labour that this line of attack only really signals to the public that the Conservatives should be the more trusted party to start scaling down the deficit. As important as who can be trusted to cut and where, is the question of when. And on the question of timing the jury is out. The Government cautions that any premature removal of the fiscal stimulus will choke the nascent recovery. The Tories have pledged to act sooner and signalled an emergency Budget next summer. The emerging optimism about the economy would favour the Conservative’s course of more speedy action. Yet the G20 Pittsburgh summit held on the eve of Labour party conference could yet provide Brown with the sufficient international cover to delay fiscal tightening. If the US and other major players agree that drawing back the stimulus would jeopardize fragile growth, again Brown will seek to couch the Tories as isolated from the policy orthodoxy. Yet any help the summit affords Brown will be short lived. With growing concerns from France and Germany to reduce the stimulus, the time for Brown to claim international support for his delayed austerity is limited. So the Government may have caught up with the economic reality. Yet the necessary, cumbersome and painful u-turn has made their interest look politically expedient.