UK: DYSON'S CLEAN SWEEP. - The revolutionary Dual Cyclone vacuum cleaner is wiping the floor with the competition - indeed, sales now top £8 million a month, more than either Electrolux or Hoover.

by Hugh Aldersley-Williams.
Last Updated: 31 Aug 2010

The revolutionary Dual Cyclone vacuum cleaner is wiping the floor with the competition - indeed, sales now top £8 million a month, more than either Electrolux or Hoover.

In the spring of 1993 Hoover launched what was to become perhaps the greatest disaster in the history of sales promotion. In a few short months, it sold hundreds of thousands of vacuum cleaners by offering free flights to America with each sale. But managers underestimated how many people would respond to the offer, and the miscalculation has done the company lasting damage. Just then, into this already saturated market, came James Dyson with the product that bears his name, the Dyson Dual Cyclone. In a sector not known for its progressive ideas, the Dual Cyclone represented perhaps the greatest leap forward since electric-powered suction did away with the need for manual bellows.

Early in 1995, Dyson's upright cleaner overtook the leading Hoover model in sales, according to independent figures. Its sales have trebled since then to more than 30,000 a month; other models hover around 5,000. With the recent addition of two compact models, sales of Dyson's premium-priced cleaners now top £8 million a month, more than either Hoover or Electrolux.

It might never have been like this. Back when they each commanded 40% of the market, both companies had the chance to take up Dyson's idea.

Like a number of other companies, Electrolux liked some things, but disapproved of the fact that the cleaner required no bag - something the companies rely on to generate after-sales profits. Hoover's views remained a mystery. 'We never met because they wanted me to sign a piece of paper saying that anything that came out of a conversation between me and them belonged to them. Considering that I was going along with a new technology, this seemed like a pretty rotten deal,' says Dyson.

The Cyclone story began in 1979. While looking for a way to avoid the mess created in spray-painting another of his inventions, the Ballbarrow (a wheelbarrow with a ball), Dyson found that other companies used systems of spinning airflow - in effect, mini cyclones - to produce orderly paint droplets. He then took apart his domestic vacuum cleaner and made a rudimentary cyclone of cardboard. It worked - up to a point. Five thousand prototypes later, Dyson had a machine ready to market - a machine in which a high-speed air vortex whizzed dirt particles to the rim of a cylindrical collector, and which, without the dustbag that on conventional machines becomes gradually more clogged, continued to perform at the same level. All you had to do was empty the collector from time to time.

A former colleague, Jeremy Fry, with whom Dyson had worked when designing a stable landing craft for engineering company Rotork, had put up half the money to get Dyson to this point. Already mortgaged to the hilt, Dyson raised the rest by selling his vegetable garden and persuading Lloyds Bank to make him a loan. Once Electrolux and the rest had rejected Dyson's idea, Rotork decided to take it on. The machine was made by Zanussi and sold by the direct-selling company, Kleeneze, but never really took off.

A licensing deal with the network marketer Amway for the American market quickly turned sour. Then Rotork wanted out.

By the end of 1984, Dyson was back to square one - until, that is, he received a phone call from the London agent for a Japanese importer of Filofax and other stylish goodies who had seen his product in a design annual. Within four weeks, he had a new agreement. Six months later, his cleaner was in full-scale production with every detail of its design intact down to the eccentric pink and mauve colour scheme Dyson had concocted.

All well and good, but the Japanese cleaner cost £1,200. This was all right for people who saw it as a designer collectable. But this was not where Dyson wanted to be. He invested the profits from the Japanese sales in refining his design to the point where it could be positioned for the mass market with a £200 price tag. But by the time he was ready to launch a more affordable product in Britain, the Hoover promotion was in full swing. The initial decision was to target upmarket, independent retailers, in the presumption they would be eager to stock a product not seen in high-street chains. But the idea backfired because they were already stocked to the rafters with Hoovers.

In the event, Dyson Appliances' first outlet was the GUS mail-order catalogue.

'Our first accounts, Rumbelows, Littlewoods and GUS, were people trying to change their tune and beat the competition. We suddenly realised that you mustn't pander to the condition of the market at the moment. You must go to those people who are trying to change the market or their position,' says Dyson. John Lewis soon signed up, but it was 18 months before Curry's and Comet climbed on the bandwagon.

Dyson Appliances now employs 500 people. Production at its Malmesbury headquarters - a combined assembly plant and R&D centre - is being ramped up from 3,000 to 5,000 units a day. Plans for one new factory had to be discarded because the company had outgrown it while it was still on the drawing board. Another building is now on the way. Meanwhile turnover of £3 million in 1993 became £10 million in 1994 and £55 million in 1995.

James Dyson seems a little bemused by it all in his corner office, gazing out at the playing fields of the school across the road. A drawing board and a Macintosh computer testify that he is still more designer than chief executive. 'I'm not an experienced manager,' he admits. 'I don't think any of us here are experienced at managing companies of the size we've become. We're all learning it together.' Dyson's competitors seem less willing to learn. Some have brought out vacuum cleaners that imitate Dyson's new silver and yellow colour scheme. But there are, as yet, no competing bagless designs. The hope must be that Dyson goes the way of Vax, the company that enjoyed short-lived success persuading people to wet-clean their carpets. To Dyson, the Vax episode at least demonstrated that the sector was open to new ideas. Where Vax went wrong was in selling an idea others did not share - that carpets should be washed not vacuumed. Dyson points out that his product merely represents a substantial improvement on an existing way of doing things.

And so far Dyson continues to demonstrate the power of a genuinely improved product to sweep all before it. 'I hope we've proved the fallibility of brands,' he says. 'Hoover goes round saying about 80% of people go into a shop asking for a Hoover. But only 17% come out with one. What is much more important than a name is what a brand stands for, the warm feelings you have about that company. Hoover made the mistake of thinking that because everybody calls a vacuum cleaner a Hoover, they are thinking of the wonderful Hoover company.'

Dyson, by contrast, has taken steps to consolidate his advantage by revolutionising the service offer that comes with his product in ways calculated to bring on those warm feelings. If your Dyson breaks down, you call a help number and a courier service picks it up if necessary. After a 24-hour repair turnaround at Malmesbury, a courier brings it back to your door.

But people do not buy a vacuum cleaner very often (unless it will fly you to America), and Dyson's domestic sales have reached a plateau during 1996. The company may yet garner a larger share of the UK market, but the more logical thing at this point is to look at the export potential.

'Our market share is now over 30% by value in Britain and 20% by volume.

If we can do that in other countries, then in a way it's our moral obligation to go and do that for the sake of Britain. We've got a wonderful product to export, and it would be madness not to go and do that. Our problem is that British manufacturing has such a bad name.

'Look at OEM suppliers,' Dyson goes on. 'The thing that astonishes me is that they don't seem to be interested in expanding their businesses.

They utterly refuse to develop their product. Secondly, they seem to think that we will take everything they produce whether it's to the right quality or not. If we fitted their faulty parts, it would kill our business as well as their own. It's phenomenally stupid.'

Dyson's most recent sorties are into Australia and France - selected not so much because of the market opportunity they offer but because Dyson has found the right people there to run the companies. This time around, the competition is forewarned - and forearmed. One Australian manufacturer, for example, wasted no time in rubbishing Dyson's product to its retailers.

Dyson is not worried: such action will merely make retailers curious, he figures. 'We were delighted because we were important immediately.

In Britain, when we started, nobody gave us any notice at all.' And he now has his dramatic sales graphs to make his case. Nor is confidence lacking - an application pack for the Queen's Award for Export Achievement already sits on the export manager's shelf.

Dyson is clear that organic growth is the way forward, and rules out the idea of a stock-market flotation. Still more distasteful to him is the idea of endorsing other manufacturers' products with the Dyson brand despite an invitation to do so from a major retailer. 'I'm absolutely not going to do that.' The only products likely to carry the Dyson brand are those thought up by the 50 designers and engineers who work at the Malmesbury plant.

When it comes to new product development, Dyson realises that his very success may have offered a hostage to fortune. He cannot guarantee that future products will embody innovations commensurate with those of the Dual Cyclone. Yet anything less might seem a disappointment. Dyson may have proved the fallibility of brands. But now Dyson is itself a brand, and this may well limit his room for manoeuvre.

It is not the sort of language he likes, but this seems the right moment to ask what Dyson considers to be his core competence. Is he a manufacturer of vacuum cleaners or of novel domestic appliances in general? Or is his core competence more narrowly defined as the development of products using cyclone technology? (One product in development is a device to extract soot particulates from diesel exhausts.) Or - more generally - as the ability to rethink the technology and appearance of all manner of products?

Dyson hesitates, then picks the broadest brush. It is 'our ability to design, develop and launch onto the market better products,' he says.

In what sector? 'I think in any sector. We happen to have done it in the vacuum cleaner sector, but I don't think that stops us doing it in other sectors.'

In a way, Dyson is where Clive Sinclair was after his early successes but before the ill-judged C5 single-seater vehicle. And he is acutely conscious of the hubris in presuming that any innovation he might dream up will necessarily be found attractive by consumers.

A better analogy, however, may be with Akio Morita's Sony Corporation in the early days. Some of its products were highly innovative; others were merely slightly innovative; all were distinctively styled. The combined effect was that Sony products were able to command premium prices and that the company became a colossal force in consumer electronic products.

Asked what his goal is by an American design magazine, Dyson shot back: 'World domination of domestic appliances'. He is attacking it in his own - highly distinctive - way.

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