When Carphone Warehouse and Dixons revealed they were in talks about a merger, the £4bn tie-up attracted headlines predicting store closures across the UK.

The combined business - to be called, originally, Carphone Dixons plc - will have more than 1,200 shops across the UK.

But this deal is not a defensive move designed to shrink the rent bill and generate as many synergies as possible. It is an offensive play that represents the start of a new era for British retailing - a post high street-crisis world.

There may be some store closures, but the merger is about Carphone Warehouse and Dixons looking to lead the retail industry into the ‘connected world’ and the ‘internet of things’.

Both high street retailers have been at the heart of the clash between the rise of the internet, the growth of supermarkets into non-food and the slowdown in consumer spending.

However, unlike some of their rivals - such as Comet - they have emerged stronger. Carphone has benefited from the popularity of smartphones, while Dixons has revamped its strategy under John Browett and his successor, chief executive Sebastian James.

Dixons, which owns Currys and PC World, has based its strategy around beating Amazon. It has signed deals with suppliers such as Samsung to sell new products exclusively, has improved in-store customer service and installed collection points in stores for online orders.

One share in Dixons was worth just 9p in November 2011 - an all-time low - but since then its share price has rallied by more than 400%.

With the retailer’s foundations secure, Dixon’s ebullient chief executive is now looking for the retailer to lead the industry. The merger with Carphone is not just about filling an empty product category for Dixons and putting smartphone concessions in its stores.

Indeed, while they may be concessions, the Currys, PC World and Carphone brands are likely to remain separate at first.

This deal is about a combination of the products, not a combination of the brands. It is about combining household appliances with the internet.

Speaking at the British Retail Consortium’s annual lecture earlier this month, James gave an insight into his views about the rise of the connected home.

Dixons sold 63,000 Sonos units last year - which allow homeowners to play music on their iPhone through their home - and James joked that when he weighs himself the reading is sent to his wife’s smartphone.

But this is just the start. Carphone and Dixons are envisaging a world where security systems email you if something suspicious is detected and fridges automatically order new food when you run out.

James predicted that by 2022 there will be more than 20 connected devices in every household, compared to fewer than four at present. By creating a retailer selling the household appliances and the means to connect them to the internet, Carphone Dixons intends to be at the forefront of the next phase of the digital revolution.

The repercussions of the ‘internet of things’ promise to be profound for the retail industry - it will not necessarily be negative for the high street.

Retailers will be blessed with reams of data about how customers behave, allowing businesses to target specific shoppers at the key moment.

“I believe that this kind of contextual information will mean much more seamless multichannel and the emergence of new formats,” James said. “Customers continue to want contact and advice and demonstration, but the dividing line between online and offline will become ever more fluid.

“The connected world, our digital exhaust, explosive data, and the PhDs to analyse and interpret it all are giving us new tools and ways to do this; indeed the smarter ones are learning to anticipate a customer’s needs and appeal to them even before the customer knows they want something.

“Because of this, new niche ways to anticipate, excite and entice customers will evolve, breathing new life into our high street.”

After years of analysing the increasing vacancy rates on Britain’s high streets, the ambition behind Carphone Dixons is refreshing. It is evidence that, as a wave of lease expiries hit the high street and shopping centres, bricks and mortar retailing is reinventing itself again.

Graham Ruddick is retail correspondent at the Daily Telegraph

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