Argos is set to launch a contract phone offer, which will pitch the high street giant head-to-head with Tesco Mobile and Asda Mobile as well as retail rivals Carphone Warehouse and Phones 4u.
The retailer will begin by trialling the sale of mobile phone contract deals online and via more than 200 stores across the UK from April this year. A second trial of an expanded range of Sim-only phones will also launch at the same time.
Argos’ move into the mobile contracts market is partly driven by falling pre-pay sales, which sources said have dropped ‘significantly’ for the retailer, and competition from the likes of Tesco Mobile, Virgin Mobile and Phones 4u.
If sales of contract deals are sufficiently strong, Argos will begin negotiations with operators to set up its own MVNO later this year. An Argos MVNO could pose a serious challenge to rival mobile phone retailers.
The company is known for its cut price deals supported by major above-the-line marketing campaigns.
It is expected to range a broad span of competitive, value driven, contract deals with handsets ranging from high end smartphones to entry level handsets.
Numerous sources suggested A1 Comms would deliver and supply contract handsets and airtime to Argos during the trial. The Sim-only deal is understood to be with 20:20 Mobile. A1 Comms strongly denied it is involved and 20:20 Mobile declined to comment.
Sources said Argos is also recruiting account managers for a new division called ‘Argos Mobile’, which is said to be the proposed name of the MVNO.
Asked about its plans for an MVNO, an Argos spokeswoman said: ‘At Argos we regularly listen to customer feedback on what they would like us to offer and we explore potential options on an ongoing basis. Nothing is confirmed at this stage.’
Analysts said the Argos offer would have broad appeal to the entry and mid range market.
Neil Mawston, director at strategy Analytics said: ‘Argos has a loyal customer base and if it targets the bottom half of the market at competitive price points it will build share quite rapidly. I would expect it to have a few hundred thousand subscribers within a couple of years.’
Author: Carol Millett