11/5/2008 12:15:00 PM
Lidl and Aldi difficulty to secure network backing
Smaller ‘budget’ non-specialist retailers are finding it increasingly difficult to secure network backing as operators opt for more experienced names to sell prepay.
The rise in market share of larger non-specialist retailers, such as Tesco, Asda and Argos, has been well documented, and smaller non-specialists within mobile, such as WHSmith, Costco, Lidl, Netto, Aldi, TJ Hughes and Littlewoods, have also made significant gains in recent years.
However, network and distribution insiders have told Mobile that so-called ‘tier-two’ retailers are increasingly at risk as networks take greater scrutiny on the return from their investment.
One distributor source said: ‘Operators know that it’s box-breaking territory, and if their funds are depleting they will look to cut the smaller non-specialists first. Places like Costco, Netto and Aldi are all very volume driven.
’The last thing networks want is to throw prepay subsidy into a channel where 20% will get connected. If that’s the case distributors won’t want to take the risk either because they’ll get clawed back.’
Non-specialists have started to dominate the prepay market this year, with Tesco, Asda and Argos increasing their muscle in the sector. Non-specialists have historically increased their share over the Christmas period, and it is thought that Costco alone sold around 10,000 units last Christmas.
WHSmith has so far been the most active of all the smaller non-specialists, with a large national newspaper advertising campaign. The retailer has advertised Nokia devices as cheaply as £14.99; however, it is also offering some high-end devices, such as the LG Prada for £249.99.