Phones4U must convince consumers it is not a one-trick pony
Phones4U’s newly-installed marketing director Russell Braterman (MW last week) has joined at a time of great change in retail. Spearheading a review of the company’s advertising account, currently held by WCRS (MW September 18), will be the least of his concerns. He steps in at a time when Phones4U’s biggest competitor, Carphone Warehouse, has entered into a £1bn tie-up with US electricals retailer Best Buy, in an effort to become one of Europe’s dominant consumer electronics retailers.
Added to this, Phones4U was also found to be in breach of a number of consumer protection laws, following a six-month joint investigation undertaken by Ofcom and Staffordshire Trading Standards. While this may not have long-term implications for the brand, it does mean that Ofcom will be monitoring complaints against it, alongside Staffordshire Trading Standards.
But Phones4U is arguably in a good position to take up the challenge. Since opening its doors in 1996, it now has over 440 stores across the UK and claims to be the country’s fastest-growing, independent mobile phone retailer.
Youthful outlook
Braterman, who replaced Jim Slater, has a consulting background and has previously worked for WPP branding agency Brand Union. He says Phones4U’s focus will be to continue to target the youth market.
Its price-driven approach has meant Phones4U has carved a comfortable niche for itself in the mobile phone retail market. But Greg Hodge, retail analyst at Planet Retail, notes that Carphone Warehouse has more successfully managed to take the next growth step by expanding into other electronic product offerings. “If Phones4U continues to focus only on mobile phones, it may struggle somewhat,” Hodge says.
The onset of the economic downturn means people are less willing to renew their contracts or upgrade. Hodge adds that the replacement cycle of phones is likely to be longer.
Mike Godliman, retail analyst at Pragma Consulting, believes that since the company was sold by founder John Caudwell to private equity investors Doughty Hanson and Providence Equity Partners for £1.46bn in 2006, it has failed to develop as a brand. “It’s a bit one-dimensional and too price-led. It needs a rethink of the Phones4U brand, what it stands for and the product offering,” says Godliman. “As the digital market changes, where does that leave Phones4U? Should they be thinking more about the new digital technology in the market?” he asks.
Godliman points out that, despite Phones4U’s different positioning to Jessops and Currys, all three are in danger of appearing similar as technological convergence continues.
And, while Phones4U’s marketing focuses on price, he says there has been little change in what it has to offer since it first began, with its shops looking the same and the brand appearing “old and tired”. But Braterman argues that the company goes beyond mobile phones, to encompass “mobile communication and entertainment solutions”.
A Phones4U spokesman says that in addition to the latest handsets, it also offers a wide range of laptops and mobile broadband. This year it undertook a trial across a number of its stores, where it showcased a range of Sky and Virgin Media products – including digital TV, high speed broadband and home telephony.
Expansion plans
“As a result of this trial, we have extended these partnerships with both companies and, from this November, Phones4U will roll out media offerings from both Sky and Virgin Media to 60 of its stores. Roll-out to a further 300 plus stores is planned for 2009,” the spokesman says.
While it appears more active than critics give it credit for, Phones4U’s key challenge now will be to convince consumers that it is not a one-trick pony.
