Orange boosts retail network against trend of consumers buying mobile phones online

LONDON - Customers are shunning high-street mobile deals in favour of competitive internet offers, with in-store sales dropping by 50% in the first quarter of this year, according to research by GfK NOP.

The shift comes as mobile operator Orange presses ahead with plans to expand its high-street offering with the opening of 60 additional stores over the next year. Earlier this year, it said it would back the expansion with an increased emphasis on customer service, which it hopes will boost in-store sales. By contrast, other retailers and operators are reining in store expansion plans.

David J Smith, head of operations at ecommerce industry group IMRG, believes that consumers in the mobile and electronics sector are using stores in a different way as they consider purchases. 'Customers will often research a deal or product online, then go into the store to discuss or look at it before buying online,' he says.

Mobile operators such as 3 UK, O2, Vodafone and Orange have begun offering web-exclusive deals in an attempt to tap into this sales trend. 'It is cheaper to do business online than through our retail stores, so we are able to offer more competitive deals to our customers online,' said an O2 spokeswoman.

Many are also tying packages together with mid-range mobile phones, which have proved more popular than high-end products in recent months.

GfK NOP attributed the changes to increased consumer confidence in online shopping, and a growing propensity to hunt out deals arising as a result of the credit crunch. It also said that the rising cost of petrol was prompting shoppers to shop online thus avoiding any expense incurred by travelling to operators' high-street stores.

SIM-only contracts and upgrade deals with discounted line rental have boosted the share of sales made on the internet, too.

Networks are also increasing their focus on upgrade deals offered by call-centre reps to capitalise on a rise in the number of consumers changing mobile contracts over the phone.

With few opportunities for networks to differentiate their offerings, customer service via call centres has become a key focus in the battle to retain customers.

Mobile operator market

  • O2 gained 275,000 customers between April and June, giving it a total of 18.7m, boosted by an unprecedented demand for Apple's iPhone in its outlets last month.
  • Orange increased its contract customer base by 13% to reach 5.8m in the first half of this year. Its total customer base was up to 15.7m.
  • Vodafone has lost 27,000 UK customers from its 18.5m base this year. About 8% of its customers worldwide are accounted for by the UK. It has been placing greater emphasis on its web-only deals this summer.
  • T-Mobile UK added 37,000 contract customers and shed 554,000 pre-pay customers in the first half of the year. It's UK customer base, including Virgin Mobile customers, now stands at 167,940.
  • Source: O2, Orange, Vodafone, T-Mobile

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