Vodafone taps potential of leaner chains
After the upheaval in the retail sector for information technology and telecommunications products which led to the closure of thousands of outlets in the last two years, only three strong chains have remained in the race: Germanos, OTE Shops and Vodafone. The latter, which emerged a year ago amid doubts arising from the failure of a similar move by the company in Australia, now has 190 of its own outlets. Vodafone-Panafon’s commercial director, Socrates Kominakis, appears happy with the results of the venture, stressing that the company saw in time the need to turn away from the model of service providers supporting thousands of sales points. He says this model was useful in spreading the product in the first few years after mobile telephony was launched but saturation came quickly and «the market came to resemble the video club phenomenon of the 1980s» – one shop on every corner. In the end, Vodafone discovered that supporting 4,000 sales points all over Greece with marketing programs and offers was far too expensive. It decided to absorb a number of service providers (Unifon, Korasidis Telecom, Panafon Commercial) and now distributes its products from about 1,000 points, 190 of which are Vodafone Shops. The mobile telephony retail market in Greece today is 95 percent composed of 2,500 specialized shops, with the four biggest chains accounting for 70 percent of sales. Kominakis says the company is now considering expanding the chain through the shop-in-shop method, but without the excesses of the past at a time when the market is maturing. He notes that Vodafone Shops account for 50 percent of sales, which is considered satisfactory. «Our aim is to develop the relationship with the client,» he says. Vodafone Shops’ main competitor is Germanos, which, however, promotes the products of other mobile operators. According to Kominakis, Vodafone’s retail distribution model in Greece was based on tapping the firm’s long-term partnership with young and dynamic entrepreneurs through the method of franchising. The franchise-holders now number 145, while another 45 shops are self-owned. «They have known the market for a number of years and believe in the viability of our business model,» he says, adding that Vodafone terminated the contracts of franchisees who did not meet their obligations. The other, and possibly more important, plank of Vodafone’s commercial policy are its rates, according to Kominakis. He believes that the latest round of rate cuts, initiated by competitor CosmOTE, was «pointless.» «Price wars are usually started by those who wish to gain market share, not those who already have the largest share,» he says. He insists Vodafone will always meet such competitive moves and that it made the deepest cuts.