Carphone gets 25% share of prepay market

Carphone gets 25% share of prepay market

Carphone Warehouse’s tactic to take market share at the expense of margins is paying off, as it continues to cut prices and secure a range of coveted exclusives.

The retailer is now taking over a quarter of all prepay sales in the UK; double the level of its nearest competitor, Argos, and three times the amount of pay-as-you-go sales from Tesco and Phones 4u.

The LG Cookie has been leading Carphone’s prepay sales, with what is understood to be a steady period of 20,000 sales per week. LG’s £100 touch-screen device proved the surprise handset hit in the run-up to Christmas, and even into the start of 2009.

The jump in market share to around 26% is a significant improvement on Carphone’s usual level of under 20% of the market, and although the rise comes during a period of fewer overall sales and declining margins for the industry, it puts greater pressure on Carphone’s rivals.

The share levels cover high street, online and telesales.

Carphone CEO Charles Dunstone said in the run-up to Christmas: ‘I keep saying to the business that the main focus [in the second half of the financial year] is market share, cash and margin. And I want it in that order.’

The group is believed to have had 17 prepay exclusives in the market since around Christmas, compared with Phones 4u’s seven, and 21 exclusives on contract, while Phones 4u had 12. The bulk of Phones 4u’s exclusives are network locked.

By contrast, Phones 4u sources said before Christmas that its sales through its non high street channels (web and telesales) were propping up its poorly performing shops.

On the contract front, the gap is also widening between Phones 4u and Carphone, with Phones 4u securing less than half the 20% share that Carphone takes on contracts.

Sources said Phones 4u’s contract sales from its shops in October 2008 were at 47,000, half the level of 18 months previously, although there was an impressive 25,000 direct sales for the same month.

Among the networks, O2 is now just below Carphone’s share of contract sales, with Orange slightly behind O2, and Vodafone further adrift.

Written by Mobile Today
Mobile Today

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