Research Notes

Distribution is key to success for Retailers

The next wave of mobile providers will be retail chains.

The retail chains will be able to take advantage of their distribution power to become successful mobile providers. The retail chain stores already have a wide distribution network that can be used to attract mobile customers and thereby use their already existing stores to sell mobile telephony to customers.

One of the largest advantages the retail chains have is the flow of customers through their stores. If even just a small percentage of their customers choose that retail chain’s mobile offering, they will quickly acquire a large customer base.

Examples of retail chain mobile providers that have been successful with this concept are Aldi Talk and Tesco Mobile.

Germany is one of the mobile markets where the retail chains have been most active and have been reasonably successful at attracting customers. But it is not only Germany that is seeing retail chains enter the mobile market. Retail chains are active in a number of European countries and over the next few years even more retail chains will launch as mobile providers and thereby start influencing the future European mobile market.

If you are already offering mobile products, either as a radio and TV dealer or as a mobile dealer, you should contemplate how large a share of your customers come from the marketing being created by the mobile operators you represent. Entering the mobile market will without a doubt influence your relationship with the mobile sector, whether it is in the form of selling mobile products, receiving marketing subsidies and/or commissions and bonuses from individual mobile operators.

The retail chains’ distribution network is much wider than the mobile operators and retail chains can take advantage of their distribution power by developing services that utilise that power. In other words the retail chains should develop so-called store-centric services that require that mobile customers need to return to the store. Examples of store-centric services could be:

  • In-store Mobile Betting
  • In-store Photo Developing
  • Mobile rebate coupons
  • Etc.

 Store-centric services will enable retail chains to differentiate themselves and reduce churn.

Much more information about retail chains doing business as mobile providers is available in our latest report ”How to get success in the second Generation MVNO Market”, that analyses the retail chains future role in the mobile universe and why retail chains need to have a mobile strategy and which market phases the retail chains will go through. Included in the report is an analysis of retail chains’ assets/strengths and risks/disadvantages when doing business as mobile providers. The report examines relevant and inspiring cases that document that the retail chains entrance/involvement in the mobile area is not something that may happen in the future, but is in fact a very current phenomenon that will become even more dominant and visible in the mobile industry over the coming years.

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