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Monday, October 16, 2006

Carphone Warehouse - independence is over-rated

I thought I'd add my tuppence-worth of opinion to the ongoing CPW / TalkTalk / Vodafone / etc debate. I don't normally talk much about the "sharp end" of mobile distribution to customers, preferring to focus on the strategic dynamics of technology upstream. But I think there's another angle to the current furore.

With the benefit of hindsight, it should have been obvious that retailers cannot effectively sell all operators' increasingly complex mobile and multi-play packages, especially if they compete with their own suppliers in some of these areas.

I believe that as products become more complex, and supplied by more companies, it becomes almost impossible to offer completely "independent advice" that is also truly competent. It's called "specialisation", and is typical in many areas. Many car dealers supply only one brand, or perhaps a handful from the same group. Consumer electronics shops do not stock every range of HiFi or TV. (Supermarkets don't count - fruit isn't "complex")

The only retail companies that can simultaneously represent hundreds of companies' similar products are the one that compare solely on price (eg insurance brokers, airline travel agents), and even these don't represent those firms that choose to sell direct or through "tied" channels (like EasyJet tickets or Direct Line policies). Not only that, but some brokers and agents specialise on particular segments (eg sports cars, holidays in Canada), representing only certain suppliers, but do not suffer from a perceived lack of "independence". The only counter-example I can think of are off-licences, where you can get advice on 300 types of wine (but what % of customers actually bother?)

As mobile communications become richer and more complex (more & differentiated services, triple/quadplay, advanced phones) it becomes difficult for a retailer to properly represent all operators and handset manufacturers. They do not necessarily have sufficiently-skilled staff - nor enough time with each customer - to enable a full demonstration & explanation to be given. Do I get better mobile TV, at better value, on a Nokia sold through Vodafone, or on a Motorola sold through Orange? Maybe I should I get two devices, one from each? And how does this change if I've got Sky or cable at home, or Orange Broadband, or a load of personal video content on YouTube? Can a retailer really give "independent" advice in that type of world?

It will be interesting to see if Voda helps Phones4U do "proper" demo's, similar to those in Voda's own stores, rather than relying on plastic handset mockups nailed to the wall. Maybe the underlying story is that "quality of point-of-sale systems" is more important than "number of retail stores".

Interestingly, I saw a reference in yesterday's Sunday Times that mentioned that Vodafone was impressed with the amount of "time per customer" Phones4U - 55minutes, conducting "a very detailed assessment of customer needs as part of the sales process", which seems to underscore the point.

(Well, maybe. When I sat in on a friend's Phones4U "assessment" much of it seemed to involve a hard-sell "Oh, I'll have to go & ask my manager about that" and ending up selling her some ridiculous tariff where she had to get a refund by submitting the 1st, 7th and 11th invoices...)

And the other angle is customer service, which is also inevitably going to become more complex in parallel with mobile products. Again, maybe specialism helps. OK, I'm not as vitriolic as Keith over at Telebusillis, but I have to say I've also had my own frustations with CPW over the past year.

Bottom line: complexity and independence don't sit well together. You wouldn't expect there to be a "Nuclear Power Station Warehouse", supplying Westinghouse, GE, Hitachi and Areva reactors.


Juan Gomez de la Vega said...

Interesting analysis...
What is your take on Handset Manufacturers opening up their own retail stores. Nokia has started doing this and has opened stores in Chicago and NY, as well as Moscow.


Motorola will also do somethign similar with what they are calling "pop-up" stores.

yyy111 said...
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