Localisation crucial for The Carphone Warehouse expansion
With 2,400 stores outside its UK base The Carphone Warehouse is well aware of the need to adapt its business to suit specific markets and works on the basis of adapting 20 per cent of its model in each country, with the remainder standard across all its business. By Glynn Davis
Ahead of presenting at the forthcoming Retail Bulletin International Expansion Conference in London on March 27, Darren Gardner, director of new business and store formats for UK and Europe at The Carphone Warehouse, says he remains mystified how many retailers still fail to tailor their offerings.
“We try and operate on the 80:20 rule but I’m still surprised how many retailers take their model and drop it into a market and think it will work. There is not a one size fits all approach that works,” he says.
In some markets the level of change needed can be greater than 20 per cent (more like 40 per cent) and this is down to the need to adapt to different legislation and competition commission issues, which can include many strange instances. In the Netherlands employee uniforms must be 40 per cent branded while in France the furniture in a store must be able to burn for 20 hours.
A localised issue specific to Carphone is the structure of the individual mobile markets and their infrastructures. “In the US over the last 10 years it has gone from 100 [mobile] network operators to a market more representative of Europe – with five to six. And it has gone from using old technology, analogue, onto digital 4G. At the macro level they work similar but at the micro level every market is different,” explains Gardner.
Where there is great similarity is with handsets, as he says “all phones look the same and work the same”. This has undoubtedly helped Carphone to grow its international footprint and take it to a hefty 2,400 stores – trading as The Phone House. As much as 85 per cent of outlets are company-owned, with the rest operated under franchise.
The strategy from early on has been to have local retail structures to support the stores in each country rather than try and operate from a central point (i.e. the UK). There is a managing director in each market and three senior managing directors for the three key regions: UK/Ireland; Spain/Portugal/France; and Sweden/Netherlands/Germany.
“It’s very difficult to run centrally, apart from purchasing functions, so all our countries are locally managed and supported by a good team in the UK,” he says.
The expansion strategy from this point is dictated by a variety of factors. Firstly in a market like The Netherlands, where it has 200 stores, the company has national coverage so activity is more about re-locating units than adding stores.
In Germany it has 150 stores so there is definitely scope for growth. Gardner says: “We are definitely not in the right position as this amount of stores is not what you need. One thousand stores are needed for scale... we’re thinking about the strategy as there is an opportunity for growth.”
And in the US, Carphone had a joint-venture with Best Buy – operating around 1,200 stores in the US – but this ended when Best Buy last year bought out Carphone’s stake in the business.
This has, however, still left a joint-venture arrangement in place whereby the two businesses are expanding into the BRIC countries. Gardner would only divulge the fact there is one trial store in China but clearly there is great scope for growth in this region to help it add to its 2,400 outlets outside the UK.
For more details and registration for the International Expansion Conference 2012, please click here.
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