Somanymobilephoneshopshaveopenedup,infact,severalshoppingcentreshavebannedthemfromrentingmoreunitsforfearofboringtheirvisitors!

Yetdespitetheirubiquity,themobilenetworksandretailerscontinuetoseeknewoutlets。

TheCarphoneWarehousewantstoopen100morestores。

Phones4uhasstateditwouldlikeasimilarnumber。

Both3andOrangearealsoontheexpansiontrail,asareVodafoneandO2–withthelatterevenopeningstoresthroughafranchisemodel。

AndVirginisopeningnewconcessionsinWHSmithstores。

Forretaillandlords,terrifiedbytheUKconsumerdownturn,thisaggressiveexpansionmustbeheavensent。

Nootherretailersareopeningupspacelikethisonthenationshighstreets。

Somebodyshouldtellthemobileoperators。

Totalretailsalesforthebulkof2005weredownfrom2004onalike-for-likebasis。

PressreportssuggestChristmas05onthehighstreetprovedbetterthanthepreviousyear,butitdidnthavemuchtobeat。

Andyetweareexperiencinganewbubbleinthemobilephonesector。

Eachplayerisbattlingitoutfornewretailspace。

Fuellingthislandgrabisthedesirebythephonenetworkstoincreasesalesthroughtheirown‘direct’channels。

Theywouldliketolessensalesthroughthelessprofitable‘indirect’routes,suchasspecialistretailerslikeTheCarphoneWarehouseandTheLink。

Themarginsjustdontcompare。

Needlesstosay,theseretailspecialistsarefightingbackby–youguesseditopeningmoreshops!

Intheirdesperatesearchfornewstorestheyhavebecomewillingtoopenoutletsinsecondarylocationsnearmuchsmallertownsthantheywouldhavepreviouslyconsidered。

Butmanyofthesemarginalstoreswillfailtoattractsufficientbusiness。

Andwhenyoucombinethisstrategywiththemassivegrowthofonlinesales,thenthelandgrabappearsasuicidalmovebythemobilesector。

Ofcourse,thesupermarketsarecleaningupintheonlinesalesmarket,andwearenotjusttalkingaboutfood。

Thebigbeasts,ledbyTesco,havebeensuccessfulinprettymucheverynon-foodmarkettheyhaveenteredclothing,financialservices,books,musictheyhaverippedintothespecialistsinallthesecategoriesandcausedmajorgriefonthehighstreet。

Withthesupermarketsnowsettingtheirsightsfirmlyofthetelecomssector,thisrepresentsserioustroubleforthemobileretailers。

Notonlyaretheysellingmobilephonesonline,buttheyhavegiventhemanincreasingamountofspaceintheirsuperstores。

Theycanshiftplentyofunitsandthereisagoodmargintoboot。

Wherethesupermarketshaveexcelledisinattractingthatgreatswatheofcustomerswhoarenotgadgetfreaks,butsimplywantamobilephonetomakevoicecallsandsendtheoddtextmessage,probablytotheirgrown-upchildren。

Forthesecustomersthesupermarketshaveprovidedastraightforwardpre-payoffer,amuch-neededdevelopment。

Incontrast,thenetworksandmobilespecialistsarenotthatinterestedinthislesslucrativepartofthemarket。

Theyhaveamuchgreaterappetiteforthosemoretechnologicallyliterateconsumers。

Theycantemptthemintousingthelatestmobileservicessuchasvideomessaging,accessingtheinternet,andreceivingthelatestsportsresults,trafficinformationandsoon。

Boththenetworkoperatorsandtheretailersgainfromtheincreasedrevenuethatthesevalue-addedservicesgenerate。

Butiftheyaretoallmaketheiraggressiveexpansionplanspay-off,boththesegroupsneedtogetmorepeopletousetheseadditionalfunctions。

Andforthenetworksthereisalsothesmallmatterofearningareturnonthosemassivemulti-billionpoundbetstheymadeattheturnofthecenturyacquiringtheir3GlicencesfromGordonBrown。

However,thereisoneseriousflawinthisplan。

Itinvolvesthetechnology。

Atthemomentmobilephonesaresimplynotuserfriendlyenough。

Accordingtoarecentsurvey,ahefty81%ofphonesownedby16-34year-oldsand75%ofthoseownedby35-49year-oldsarecapableofsendingvideomessaging。

Yetamassive80%ofnon-voicerevenuefromphonesisstillderivedfromgoodoldtextmessages。

Buttheyrenotagreatearnerforanybodyinthemobilesector。

Customerssimplyfindittoodifficulttounderstandthesettingsneededforaccessingthemorecomplexservicesontheirphones。

Norcantheyfigureouthowtheirbillingsystemswouldchargeforthesefunctions。

Yes,theFleetStreetLetteragreesthattheseproblemswilleventuallyberesolved。

Theadditionalserviceswillthenbeusedbythemassmarket,generatingnewstreamsofrevenue。

Butrestassuredthatbythen,thesupermarketswillbereadyandwaitingtostepinandgrabasizeablechunkofthemarket。

AlreadyweareseeingthisstrategyatTesco,thedominantforceinsomanyofBritainsretailmarkets。

Ithasstatedthatnextyearitwilllauncharangeofsimple-to-understandmobilephonecontractdealstoaddtoitscurrentpre-payoffer。

Italsorecentlyopenedadedicated‘store-within-a-store’sellingtelecomsgearatitsTescoExtraoutletinSlough。

IfthisconceptworksthenTescoplanstorollitoutaroundthecountry。

Let’sbeclearhere,Tescoisdeadlyseriousabouttelecoms。

Thismeansdifficulttimesaheadforexistingmobilephoneretailers。

MostexposedarethespecialistoutletssuchasTheLink,TheCarphoneWarehouseandPhones4u。

ByfartheweakestofthebunchlookstobeTheLink,ownedbyDixons。

Ithasreportedsomeprettyawfulnumbersoflate。

Forthe28weekstoNovember12like-for-likesalescollapsedby28%。

TheLinksuffersfrombeingasubsidiaryofalargergroupwheremanagementattentionisprobablynowdivertedtosisterchainsDixons,PCWorldandCurrys。

Theytooareallhavingatorridtimebattlingboththeonlineelectricalsretailersand,ofcourse,Tesco。

Likeallotherretailers,themobilephonestoresknowtheChristmassalesperiodisthemostcrucialtimeoftheyearfortheirprofitlossaccount。

Alleyeswillbeontheirtradingstatementsthismonth。

Anysignsofweakness,andtheirrivals–alongwiththeCitywillgoinforthekill。

Inourview,thedownsidestoryforsharesinthequotedmobilephoneplayersiscompelling。

Shortsellerstakenote。

ByGlynnDavisforTheFleetStreetLetter

GlynnDavisisaregularcorrespondentfortheGrocermagazinetheretailindustrysweeklybible。

AformerfundmanagementandventurecapitalspecialistintheCity,todayGlynnalsowritesfortheGuardian,FinancialTimesandRetailWeek。

HisspecificstockmarketrecommendationsappearinTheFleetStreetLetter,theUKslongest-runninginvestmentnewsletter。

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