So are PC retailers responsible for ‘Rip-off’ Britain?
We don't think so
Opinion This article was first published in July 1998 Another day, another whinge from Fujitsu, this time about the burden of taxation placed on our downtrodden schools, whenever they buy PCs. The vendor has filed a series of representations with UK consumer affairs minister Nigel Griffiths, claiming that schools in other EU countries are given tax breaks and so can afford to buy more PCs than UK schools are able to. In the quotation that appeared all over the press, Fujitsu UK managing director Brian Taylor asked Griffiths: 'You're trying to bring IT into education - why don't you make this a level playing field?' He gave Griffiths a sheaf of documents showing that other EU countries, especially Sweden, had a preferential rate to encourage schools to use PCs. But why should the UK government alter its fiscal policy to indulge in a piece of social engineering on Fujitsu's say-so? Especially when UK schools by all accounts already have the highest PC penetration in Europe. And prices are coming down, anyway. Why not lower VAT rates on bicycles, tampons or pianos? No amount of PR-inspired special pleading for the little children can disguise Fujitsu's naked desire to shift more kit. It is also a vociferous campaigner against high mark-ups, which it claims are levied by UK retailers, pointing its finger firmly in the direction of Dixons Stores Group, the dominant player in the UK electronics retail market with 35 per cent share of consumer PC sales. The argument goes like this: UK computer prices are up to 30 per cent more expensive than in Germany. Therefore UK consumers are getting ripped off and UK retailers are to blame. Let's leave aside the consideration that Germany is the most fiercely competitive and most heavily loss-making PC retail market in Europe, a country that has seen the disappearance of its most important PC vendors, either into the arms of the liquidator (Escom), into bed with an OEM (Siemens Nixdorf) or into the maw of the ever-expanding CHS (Vobis). More interesting is the inference that DSG has some sort of monopolist power to impose its will on the market. Sure, it mopped up two competitors recently - Byte Computer Stores, the 16-outlet PC superstore chain and the 40-branch retail business of Seeboard, the electricity supply company. These retailers weren't put up for sale because electronics goods prices were too high - they were sold because their owners were unable to cope with fierce price erosion in the market. If Dixons chose to operate a price war, even more retailers would fail. But it doesn't. Operating in a bombed-out retailing sector, Dixons wants to conserve as much margin as possible. The group may be powerful, but with 12 per cent of all UK PC sales, it's unable to enforce minimum PC prices in this country. The company is free to choose the prices it sells at. And if it gets its prices wrong, customers are free to go elsewhere. Just as Fujitsu is free to blame others for its singular lack of success with UK consumers. ®