Retail ignores market trends

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A survey exclusively into UK mobile retail shows a buoyant market in terms of physical numbers, in which dealers appear to be holding their own against the chains

Economic conditions do not point to growth within UK retail, and the trading conditions in the UK mobile market do not suggest it either.

But UK network, multiple and independent retailers have increased the number of their combined mobile shops by 12.5 per cent against this ugly backdrop.

Indeed, in a saturated mobile market, where contract renewals are getting rarer as subscriptions get longer, competition among top brands for prime retail estate has intensified.

Even if the market is consolidating, with operators merging or looking for subscriber growth overseas as local profits decline, and with incumbent manufacturer brands struggling and an entire supply chain scratching for new revenue streams, UK shop numbers have risen from 3,847 in April 2009 to 4,329 in April 2010.

That is according to research firm the Local Data Company (LDC), which trawled 700 cities and towns over six months to find a buoyant mobile retail market – in physical shop numbers at least.

LDC’s Upwardly Mobile mobile phone shop document put this contradictory growth trend down to, yes, the Apple iPhone, or more generally to the requirement for operators to explain devices’ broad functionality to users in order to raise awareness, data usage and consequently profits.

Although it does not make explicit reference to this kind of operator urgency, it neatly drops reference to the iPhone range and the coming-of-age of the smartphone segment with its rise, alongside the influence of Google’s Android system.

LDC says in its report: “The sales facility offered by the mobile phone shop has changed significantly over the past decade from a way of building brand and market share to a platform for demonstrating device functionality.

“Apple iPhones, for example, are not about the ability to make mobile phone calls, rather the range of applications that can make use of the mobile connectivity offered.”

As a snapshot of the UK mobile retail industry, and the cliched old fight between dealers and high street multiples, LDC’s report makes for an interesting read. However, its segmentation of the market is simplistic, arguably.

In its definition of mobile retail, it groups ‘multiples’ as all network retailers (O2, Orange, T-Mobile, Three, Vodafone, Virgin Mobile), both the major high street independents (Carphone Warehouse and Phones 4U) and the big dealer chains (JAG, Get Connected, Go Mobile and Fonehouse), which are increasingly expanding through franchise programmes.

Independents are single-store chains, and interested in unlocking, prepay and SIM cards by and large, according to LDC. Therefore, the dealer fraternity is robbed of its largest and perhaps strongest protagonists in this calculation of UK retail.

Still, the sense is UK independents have settled on a consistent number, and are not in decline in real numbers – only marginally as a percentage of the total.

And this pattern appears to be the case despite the loosely grouped ‘multiples’ starting to encroach on secondary towns as the 10 key city centres in the UK reach saturation, especially in London and the South East.

LDC director Matthew Hopkinson says the number of places trawled by the company is set to increase from 700 to around 2,000 over the next 18 months thanks to expansion of its process.

This will equate to an additional 180,000 records. It currently holds 320,000 records, which will increase to 500,000 as a result.

Hopkinson says some of these centres will be updated bi-annually and the more remote centres will be updated annually. This will give a more detailed picture of that encroachment, and the real health of dealerships, as well as the entry of the likes of PC World, Currys, Tesco, Asda, Argos, Apple as mobile phone retailers.

But for now, the 2009/10 report looks a decent guide.

LDC director Matthew Hopkinson sums up: “Recession notwithstanding, the number of mobile shops has continued to grow rapidly over the past year. However, key city centre markets are beginning to show signs of saturation and this, combined with consolidation amongst the multiples, may well slow the growth significantly going forward.

“The sector has also seen competition from online sales and, as the devices become more powerful, this will increase. It is not clear whether these changes are yet fully reflected in the number of shops on the high street, but they will continue to have an impact going forward.”

Full article in Mobile News 466 (June 21, 2010).

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