John Lewis’ ambitions in the mobile market were ramped up last week when it announced a deal with 3 to stock the operator’s prepay handsets and broadband.
The retailer, which dipped its toes into mobile in 2009 with the launch of 12 prepay handsets on T-Mobile and Vodafone, says its strategy in the area is ‘under review’, and would not answer any questions on future plans.
Although the deal with 3 sees John Lewis partnering with the smallest operator, and only in prepay, it seems the retailer has bigger ideas, which could see more operator partnerships and a move into contracts.
Industry commentators have been waiting for John Lewis, with its reasonable retail estate of 29 stores, to make a major move into mobile.
Waitrose, owned by John Lewis, has a retail footprint of 225 shops and has more planned – the combined total could reach 300 by next year.
If John Lewis extends its mobile offering to Waitrose stores, or sets up a concessions deal or even an MVNO within them, it could become a force to be reckoned with in the supermarket space.
John Lewis’s ‘never knowingly undersold’ motto, has also given it a prestigious reputation in the electronics market. It already sells laptops and TVs, and mobile will allow it to draw on the ‘third screen’ concept, which sees the handset as the remote control for a home network of devices.
The average consumer will go for such a strategy, says Strategy Analytics analyst Phil Kendall. ‘John Lewis is a trusted retailer with a good reputation. Consumers who are interested in third screen but don’t know about it would feel comfortable walking into John Lewis.’
He adds: ‘It is an appealing place to buy consumer electronics and you get a price to match high street stores – its tagline is “never knowingly undersold”. It is a safe bet.’
Such a move sees it going head to head with electronics retailers such as Currys – which has a growing number of Phones 4u concessions – as well as brands such as Argos, Asda and Tesco, and even Carphone Warehouse’s Best Buy.
Carphone says it has ‘a lot of respect for Waitrose and takes its entry into the market seriously’. However, it adds that it is ‘used to facing very tough competition on the high street already’ and it ‘believes we can provide a store environment and level of expertise that other entrants to the market will struggle to match’.
Mobile broadband, netbooks and ‘iPad type products’ will do well at John Lewis, Kendall says, adding: ‘They do a lot of high-end consumer products. Bundling those with mobile connectivity would have a positive effect.’
However, Kendall does not believe John Lewis can shake up the market unless its retail footprint increases. He says: ‘I don’t think it will transform anything for its network partners but it will be good for them.’
He sees the retailer as ‘more of a PC/embedded netbook type – almost a step up from smartphones’ and is doubtful whether contract handsets could succeed, even with the help of a Waitrose distribution channel.
He says of Waitrose: ‘Generally supermarkets struggle with contracts. Tesco does them but overwhelmingly it does well in prepay.’
He adds: ‘The challenge is, Tesco succeeded because that is squarely where the reputation is. It’s a safe bet, it’s a good proposition.’
Times are tougher for more ‘upmarket’ retailers that want to go into mobile, says Kendall, adding that ‘there is less room for independents
and general independents’.
However, if John Lewis is ‘serious about it’, Waitrose will give it scale.
But he warns: ‘Tesco has two million prepay customers. I’m not sure how much John Lewis will impact on Tesco or even Argos.’
If John Lewis is committed to its mobile venture, it will need to forge more operator deals soon, and in contract. Dipping into a market so slowly and cautiously may simply be too little, too late.
A niche for John Lewis?
High-end stores have never really found a niche in the mobile market. Selfridges stocked smartphones, as well as Motorola’s £2,000 Aura device, but has not so far become particularly competitive.
With the ever increasing emergence of smartphones, electronics ‘expert’ John Lewis already has a niche it could move towards.
The strategy would require the retailer to head into ‘Geek Squad’ territory, and would require more specialist staff, but could see it having a real presence in the mobile space.