Business improving, say retail staff

Business improving, say retail staff

The view from the shop floor is looking good, according to Mobile’s recent survey of retail staff.

The mobile retail sector is in the midst of an upturn, with 44.83% of store staff reporting that business was better in February and the first two weeks of March than three months ago.

There is still need for caution. The survey shows the patient isn’t fully recovered just yet. Only 6.9% of store staff say sales are significantly better, while 25% say business is worse.

However, the industry is out of intensive care, with 20.69% of stores reporting business as usual for the period and only 1.72% of respondents saying business was significantly worse.

But don’t put the champagne on ice just yet. Neil Mawston, analyst at Strategy Analytics, says the industry is still clawing its way up the far side of a U-shaped recovery.

He explains: ‘The industry has been coming out of the trough since mid 2009 and these figures tally with retail figures generally, which show the market is fairly upbeat. However, interest rates are now lower than ever, which is a sign the market is still in the doldrums. That feel good factor is coming back, but we will not see a return to 2007/2008 levels until at least 2011 or even 2013.’

Consumers appear to agree, revealing their caution by their robust appetite for cheap tariffs. Mobile’s survey shows the majority (41.38%) of retail staff rate tariffs as the main factor driving sales. With consumers clearly bargain hunting, the pressure is on operators to deliver even more competitive tariffs.

Surprisingly, handsets fared the worst in the survey, with a minority (17.24%) of store staff rating handsets as the key sales driver. This is not good news for operators who see handsets as key to their high-end strategies.

Shaun Collins, MD of telecoms analyst CCS Insight, agrees that ‘in a credit challenged world people are very price conscious’ but he argues the iPhone is playing a key role in driving footfall and, indirectly, sales of other handsets.

He explains: ‘I think the iPhone is at the heart of increased throughput in stores. Consumers have been drawn in by the iPhone, which is now much more widely available. They may not all buy into having one, but that allows the channels to redirect those that decide it is too expensive to other handset offerings, such as BlackBerrys.’

Apps came in second at 22.41% as a key sales driver in Mobile’s survey. Although a long way behind tariffs at 41.38%, apps are clearly significant.

Analysts say they are set to grow as smartphone sales increase and Apple, Google and other manufacturers continue to aggressively promote their respective App stores. O2’s recent problems with data overload on its network, attributed to apps, are a barometer of how significant growth in this area is becoming.

Collins says apps are increasingly important to consumers. He says: ‘Our research shows consumers are increasingly buying handsets for what they do and apps are key to that. It’s explosive. I don’t think even Apple expected apps to become the treasure chest it is becoming.’

Meanwhile, services, such as benefits and offers, are also showing significant trade, according to Mobile’s survey, with 18.97% of store staff reporting services as a main sales driver.

As the market becomes more competitive, operators are expected to continue to expand their service offerings.

Meanwhile, retail staff’s perception of mobile broadband sales was better than the market’s own. While only 15.52% of sales personnel reported poor sales, 27.59% said sales were going very well, 29.31% said sales were going well and 27.59% said sales were the same as three months ago, indicating a robust market.

Overall, the survey is optimistic but this is no time to be complacent. John Strand, MD of Strand Consult, predicts fundamental changes in the retail sector this year. He explains: ‘We will see the number of dealers in the UK decline because all operators have to run more cost efficiently as the market continues to be highly competitive. Just the merger of T-Mobile and Orange will see a reduction in outlets in the UK this year.’

Competition between stores will also intensify with clear leaders already emerging, Strand claims. He says: ‘The retail sector will get tougher with consumers clearly preferring to come into those stores with a wide selection of products, such as Carphone Warehouse, and this will put pressure on those stores that do not offer this kind of choice in products and services.’

Written by Mobile Today
Mobile Today


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