High street shoppers are familiar with brands and retailers
teaming up to offer products they would not usually expect to
find, via a concession store.
One of the most successful models has been between book stores
and coffee shops. Borders partnered with Starbucks, and
Waterstones with Costa, offering obvious benefits for the
During 2009, two of the mobile industry's major players started
using the concessions model to attract different market segments.
Both Orange and Phones 4u have secured concessions partnerships
with retailers that would not normally sell their products.
However, it is not the first time the mobile industry has
ventured into an alternative retail model. The question is, will
it work this time?
Past mobile concessions
When 3 entered the mobile market several years after its
competitors it had a lot of ground to make up, but one crucial
arm of the business was missing - a retail estate.
Instead of investing in the expensive process of buying stores,
it partnered with Superdrug (also owned by 3's parent company,
The company decided that a series of 'stores in stores' would
work more effectively. At the peak of the partnership, 3 had
1,303 concession stores in Superdrug shops around the country.
However, the operator had also embarked on a programme of
standalone stores, and it soon became apparent that these were in
direct competition with the Superdrug concessions.
In addition, 3 started appearing in HMV, but this stopped when
the operator shifted its focus away from music and towards
Retail expert Richard Hammond says: 'There are two key things
that make a concession work. First, it has to be a good match
between the host retailer and concession, and second, the host
retailer must have good footfall.'
Retailers heavily scrutinise the value of floor space and the
concession must generate more revenue than the retailer would
normally get for the same space.
'And for the concessions, they get a prime location for a rent
that is unlikely to be as much as paying directly to a landlord.
In exchange, there will be some sort of profit share and a
percentage of the concession's revenue will go to the host
retailer,' says Hammond.
The latest partnerships, between Phones 4u and Currys, and Orange
in HMV and Asda, will have looked at key factors such as
competition, strategies and location to ensure that they will
work in the long term.
Orange and HMV
Orange's HMV partnership was first announced in April 2009 and
began with a trial of 15 stores, with aspirations of reaching
100. By November, the network had a total of 23 concessions in
HMV stores, which has now risen to 25.
An HMV spokesman says of the concessions venture: 'We are always
looking for new ways to deliver entertainment content to our
customers and to make optimum use of our stores. Mobile
represents an engaging platform that can only grow in appeal and
impact in the future.'
Both companies view mobile content as a space for earning
revenue, which is a key factor in why the concessions are proving
to be so popular.
The HMV spokesman continues: 'There is a good fit between HMV and
Orange. They are keen to promote their devices featuring
music, film and games content, which obviously overlaps strongly
with our company.
'HMV, in turn, has diversified and now stocks a wide range of
technology products, including mobile phones and MP3
devices. Orange is ultimately a desirable, aspiration
brand, and works well with our own brand profile.'
The network's relationship with Asda is also developing and, as
Mobile recently reported, more concessions will be added to its
Asda portfolio this year.
Both Orange and Phones 4u have deployed existing staff into the
concession stores to ensure that the technical knowledge is not
However, both companies are keen to emphasise that they are
working in partnership with the host stores. Orange staff have to
go through the Asda training, while Phones 4u staff must be able
to point Currys' customers in the direction of products that
aren't mobile related. Both partnerships have also merged their
logos for the concession stores.
Phones 4u and Currys
Phones 4u's first concession opened on 1 August in Curry's
flagship 60,000 sq ft megastore, initially as a six month trial.
However, a second concession was opened in Lakeside, Thurrock in
Phones 4u business development director John Welsh said at the
opening of the first concession: 'We have deliberately not set
any targets as this venture is an unknown entity.'
For some staff members, working in an unstructured environment
could have proved problematic. But Welsh was clear at the time
that the new venture was a direct way of tapping into a market
that would not be attracted to Phones 4u on the high street.
A similar benefit has been acknowledged by Asda and Orange. Asda
telecoms buying manager Spencer Brown tells Mobile that, due to
the different customer demographic, it is able to pick up a
completely different customer base from that which Orange would
This is another key factor for successful concessions, while
location is also important. Brown continues: 'We are working with
Orange very closely to ensure we put them in the right shops. We
are taking into account customer feedback and have to be careful
on how we select those stores.'
HMV's spokesperson echoes this sentiment: 'The main two considerations are availability of trading space in-store -
typically, the selected HMV stores tend to be larger than
average; and also to ensure the concessions complement Orange's
own retail trading, so that they are in areas where Orange may be
Will concessions take off?
The most recent wave of mobile concessions are more considered
than their predecessors, and those involved are working closely
to ensure the partnerships are successful.
However, to survive and generate revenue long term, it is vital
that the products sold by the host retailer and the concessions
complement each other in some way.