Carphone Warehouse needs to understand how far it can go beyond selling phones

Carphone Warehouse announced its third-quarter results on Tuesday, stating a strong 15 per cent growth in noncellular sales, based mostly on significant demand for tablets. Although the company also highlighted positive postpaid-smartphone sales, its revenues fell 4.7 per cent, mainly because of a weak quarter in the low-end prepaid market.

Carphone Warehouse says there will be three main pillars of long-term growth:

  • Continuous postpaid-smartphone sales growth, since customers normally upgrade their phones when their contracts are up.
  • “High end” prepaid users. Although the company said demand from prepaid users has been weak, it says there is strong potential to upgrade a number of segments in the prepaid customer base (including the most loyal customers) to smartphones.
  • A broader product portfolio, going beyond handsets and smartphones. Because of the significant growth in tablet sales, the company is willing to start offering other consumer-electronics products, such as laptops and e-readers.

No question Carphone Warehouse has been successful in the smartphone and tablet markets, by creating a shopping environment in which customers can experience new devices, in addition to offering strong client and technical support via its Geek Squad. However, it needs to carefully evaluate how far it should go beyond selling phones.

Because many consumer-electronics products provide big margins for the seller, the field is competitive and will be challenging for Carphone Warehouse to enter. To compete, Carphone Warehouse needs to maintain its core strategy when offering new products and services.

Carphone Warehouse should focus on connected devices as its core business and transfer to connected-device sales the experience it has acquired with smartphones and tablets, taking advantage of its customer-care and shopping-experience capabilities. For example, the Geek Squad can be a strong differentiator to attach to connected TVs.

Another strong suggestion is to apply innovative initiatives used by US big-box retailer Best Buy, with which it has a joint venture, to sell connected devices. For example, Best Buy’s US MVNO recently began adding connectivity to laptops. Carphone Warehouse might not launch an MVNO in Europe, but it could work in partnership with operators to embed connectivity services in these devices.

A mystery-shopper survey on connected TVs conducted recently by Informa Telecoms & Media revealed that UK retailers fail both manufacturers and consumers, because smart TVs remain a low priority, with many retailers ill-equipped to sell these products because the majority of stores have no Internet connection, no dedicated in-store section and poorly trained sales staff. This is definitely an area in which Carphone Warehouse can differentiate itself from its main competitors in a fast-growing market.

By focusing on tablets, accessories, applications and content, becoming the “home of technology” (or maybe “connected technology”) seems to be an interesting road, which is in line with Carphone Warehouse’s core value proposition. The challenge will be to take the good customer experience and support it provides its mobile phone customers and apply it to these new products.

Leave a comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.