Dixons Carphone has announced that it is having to rethink the mobile side of its business following a drop in sales during H1 of 2017. After announcing that mobile sales were down 3 per cent for the first half of the year in the UK, CEO Seb James admitted that that side of the business needed a shake up. James added that conversations with network providers were already underway to ‘unleather’ the retailer from existing contractual obligations.
“We know that the business needs some changes,” James said. “Some things have happened this year that have affected our numbers. It is not the end of the world but we need to adapt to the changing market.
“There are three main challenges to mobile right now. The first is cost. In terms of flagship phones there has been a 25 per cent rise. The iPhone costs £1,000 now and the S8 has also seen a 22 per cent price increase.”
James explained that in Dixons Carphone’s markets outside of the UK, cheaper phones made by the likes of Huwawei fill the gap left beneath the expensive manufacturers. However, he added that in the UK, there is still a strong demand for a ‘free phone’ on a contract and predicted that the ‘free phone’ demand will always be strong in the UK and we will continue to cater for that.
“Another thing to consider is the difference in technology,” James added. “Taking the iPhone, there isn’t really a massive difference between the 7 or the 8 or the X, so people aren’t desperate to have the latest device straight away. When the 6 came out it was revolutional. People were happy to throw away their phones for a 6. But that isn’t the case any more.
“People are holding on to their phones for around five months longer than they were just 18 months ago. Whereas most consumers upgraded after 24 months they are now hanging on to their phones until they break them or they run out of battery. Instead people are letting their contracts run down and replacing it with a cheaper SIM only contract. So we have to adapt to those trends and changing markets. “
However, despite the issues presented over H1 of 2017, James is confident that the mobile side of the business will bounce again. “We are the biggest provider of mobiles in the UK and will continue to be so in the future. We are the most reasonable place to buy and phone and we are the cheapest and always will be. We are confident that with the help of the networks we can get things back on track.”