Accelerator: From little acorns

Stanley Kalms turned an ailing photographic studio into Dixons, the mighty consumer electronics chain. Dave Waller reports.

by
Last Updated: 09 Oct 2013

In 1937, Charles Kalms flicked through the phone book in search of a name for his new photographic studio. He stopped at 'Dixon'. It was a pragmatic choice - his blank signboard had space for only six letters. Back then, he would have had no idea that Dixons was to become one of the most respected and feared names on the British high street.

Business didn't go well initially. The first studio, on Southend High Street, was followed by six more, but Kalms was soon back with a solitary branch, this time in Edgware. Things may have stayed that way had his son Stanley not joined the family firm from school in 1948. The youngster persuaded his dad to ditch the photography and start selling high-margin camera kit instead, and soon they had a fully fledged mail-order business.

Stanley Kalms attributes the company's early success to a trip in the 1950s to the Far East. He couldn't move for cheap consumer electronics, and Dixons became the first UK company to set up deals with these hi-tech producers, putting it at the sharp end of the technology revolution that would later bring us everything from TVs to MP3s. Said Kalms: 'I found my formula.'

Kalms describes himself as the 'great plagiariser'. When the company floated in 1962, he used the capital to acquire successful smaller chains, forming the blueprint for Dixons' phenomenal growth. When Kalms senior died in 1978, Stanley became MD and chairman. Six years later, Dixons led the consumer electronics market, having bruised its way through a £300m battle for Currys, in what Kalms called 'the deal of the century'. But the shrewd purchases didn't stop there - PC World had only four outlets when Dixons bought it in 1993. Now the computer chain has 157 stores in the UK, with sales in 2005-06 of £1.74bn.

Kalms' luck wasn't always in. His bid for Woolworth in 1986 was audacious but ultimately fruitless. Two years later, Woolworth - by then known as Kingfisher - came back with a counterbid. This failed too, but the rematch cost each side £40m or so in fees. Kalms also tried to crack the US market, buying Silo, a US retailer, in 1987. The company tanked and Kalms was forced to cut his losses.

At 75, Stanley Kalms is now a high street legend. A born entrepreneur (unlike his dad), he was a bullish manager, contrary with staff and tirelessly hands-on - he insisted on knowing hour-by-hour how sales were going in his stores. 'I was full of management skills,' he says. 'I was single-minded, ambitious, a good recruiter of people and a good delegator. And I had a great gift of buying, which to my mind is the secret of any business.'

Kalms took a back seat in 2002, becoming life president, but the chain seemed to breathe its boss's belligerence. John Lewis accused Dixons of overcharging customers; Intel boss Craig Barrett complained that UK computer sales were being slowed down by Dixons' high prices. And the chain was criticised for tying manufacturers into exclusive contracts, the Consumer Association accusing it of giving consumers 'a raw deal'. It's also said that when you visit a Dixons branch, knowledgeable staff are as hard to locate as a decent bargain.

Even so, Dixons is now Europe's biggest electronics outlet, with more than 1,200 stores, 42,000 employees and an annual turnover exceeding £7bn. This is largely thanks to the guiding hand of John Clare, who took over the running of the company in 1992, proving the perfect foil for Kalms' idiosyncrasies: the charming, cunning chairman and the passionate and loyal chief exec.

Clare is credited with shaping the modern group - moving Currys to out-of-town stores, growing PC World and mobile phone chain The Link, and in 1998 launching Freeserve, Dixons' pioneering pay-as-you-go internet service provider, which was sold to French telecoms firm Wanadoo in 2000 for £1.65bn.

With consumers deserting the high street for cheaper online sources, the Dixons chain underwent a rebrand: the name disappeared from the high street and moved exclusively online under the label www.currys.digital.

DSGi, as the group has been known since 2005, is weathering its worst-ever storms. In April, it announced a drop in profits of 61.4% on last year, but UK profits have been stagnating for six years in the face of competition from supermarkets and niche retailers such as The Link's rival Carphone Warehouse. The group recently wrote down the value of its Italian operation, closed its French PC City stores and abandoned a move into Russia via a $1.9bn bid for electrical retailer Eldorado.

To compound its problems, Clare stepped down in September. His successor will need to be someone who thrives on adversity.

STANLEY KALMS: 'I always say: "Bend the rules, gentlemen; rules are for bending." There are only two rules that should never be bent: say what you mean, mean what you say; and don't steal.'

ACORN (1937) OAK (2007)
HQ Southend High Street Dixons House,
Hemel Hempstead
No. of staff Two 42,000+
No. of stores One (Southend) 1,200+
Annual turnover Modest £7.07bn
Offering Photographic White goods, TVs,
studio taking computers, digital
professional portraits photography, etc

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