[3GScottishUser]

From Mobile Today (15/04/2005):

Superdrug is lobbying for 3’s parent company, Hutchison Whampoa, to remove 3’s concession stands in some of its biggest stores, Mobile has learned.

Three of 3’s concession stands were axed last week, including its flagship stand on The Strand in London’s West End, which was opened with a fanfare in November 2003 as 3’s hundredth concession outlet.

Superdrug wants Hutchison to give back the prime shop floor space at the windows in its biggest stores to sell its products as it undertakes a two-year rebranding and refitting of its stores.

Bosses at the pharmacy and beauty retailer are understood to be frustrated by poor sales figures from the stands selling 3’s handsets and believe they can achieve a better space-to-sales yield selling Superdrug products.

A source close to Superdrug said that stores in prime city centres and shopping centres are failing to overcome the twin pressures of high sales targets and fierce competition from the likes of The Carphone Warehouse and Phones 4u.

‘The rates are quite high in a lot of the areas that aren’t performing, and a lot of them are not making any money either,’ he said.

Deals in 3’s concession stores look far less attractive when compared to cashback-rich deals in specialist mobile retailers.
One Superdrug store manager confirmed that the withdrawal of a chunk of the 3 concessions was being ‘seriously considered’ by Hutchison under the rebranding of the Superdrug chain. He said: ‘Some of those stores have been unsuccessful. There seems to have been a bit of carpet-bomb when they opened all these [concessions] up. They are looking at the return per square footage.’

Hutchison opened its first concession store in May 2003, quickly reaching 100 in just four months in what was hailed as ‘the fastest retail rollout in recent years’.

There are currently around 150 concessions selling 3 phones, way below the 400 that Hutchison Whampoa chief Canning Fok once stated as an ambition.

A spokeswoman for Superdrug said the concession stores had been ‘extremely successful to date’, but said there had been ‘minimal closures’ due to ‘commercial viability’. She added: ‘We can confirm that we are very happy with the current arrangement we have with our sister company and have no plans to review this at present.’

Meanwhile, a spokeswoman for 3 said: ‘It’s just business as usual. Any business reviews the performance of its sales channels, what’s working well and what isn’t. Fundamentally, the store-within-a-store in Superdrug is working well.’

http://www.mobiletoday.co.uk/artman-test/publish/article_303.shtml

[Ben]

Sounds like a lot of contradicting stories there.

It makes absolute sense to return floorspace to Superdrug in the stores where the superdrug products would make more money. I never really understood the retail combination of hairspray, neurofen and 3G phones but it sounds like it's working in the majority of cases.

So long as Hutchison's having fun, eh?

[3GScottishUser]

My local Superdrug has a 3 point which does OK but the staff in it are not that keen on the Superdrug staff and vice-versa.

Its a case of two very different businesses being forced to work together for convienience and reasons of economy and it does'nt really make a great deal of sense.

Ah well... let them sort it out!

[miffed]

I must admit when they started out I assumed they'd only lodge with superdrug until they were established , then move into their own shops
But looking at their product "range" , would that warrant a whole store of it's own ?
Walk into an Orange , Voda ,O2 , Tmoblie shop and there are about 20+ handsets
What would you see in a Three shop ? about 5 handsets ?

Hardly worth the bother IMO

[chaslam]

yes I know what you mean miffed. I really think that it is time to go out of superdrug and go into proper shops. In one or 2 of my local superdrugs I have acually got to know the staff and they are very kind and helpful. But then again I went into one last week (not a local one) and I asked if they had brought out a case for the A1000. Firstly the lady could hardly speak english, then she went and got me a E1000 case! She corrected herself and looked for a A1000 and said they didnt have any, but the link would definatly have them. I didnt even bother going into the link because you all know what the would have said. no!

[Jon3G]

I dont think 3 have the cash to start opening independant stores and how big will they really be. Only a few handsets you only need 1 window display to show them. Looks like the janitors room is the way for 3 UK stores. However I must say that when I got my 3 contract and within 14 days had enough the store were very helpful and understanding. Far better than the 3 CS. So this could damage the CS for 3 further. After all people do like to speak to someone face to face, rather than down a phone

[Hands0n]

Perhaps they'd be better off supporting the smaller dealer with better kick backs .... errr ... ummm ... I mean margins :)

For my part, I've pretty much vowed never to set foot in the door of the mobile phone chain retailers such as CPW and Fones FU and the Plink. They're worse than Dix*ns and Come-it are on a bad day - totally awe uninspiring.

Contrast then my local dealer, a two-man band, highly enthusiastic, knows the products inside-out, actually uses a 3 phone himself (I caught him pi55ed in a local bar one night and he really was using his A1000 to blag his way out of trouble with his Mrs for being so late!).

Although, to be totally honest, I've never even seen a Threepoint as all the Superdrugs I ever get to use are in country towns and these are not as large as the City shops. So I cannot account for their efficacy, suffice to say that if I were Hutch I'd expand and exploit the [very keen] small dealer network.

[3GScottishUser]

It's gotta be bad news when a sister Hutchison company want them out.

I suspect the fit was pretty dire in the first place.... "A packet of condoms, some shaving gel, some shampoo and an NEC mobile phone please on a contract'

Duh!!!

[3GScottishUser]

The above might be taken as sexist so from a feminine perspective.......

'A packet of tampons, some hair spray, a baby bottle and a Motorola mobile phone on pre-pay'

Still Duh!!!

[Jon3G]

It's gotta be bad news when a sister Hutchison company want them out.

I suspect the fit was pretty dire in the first place.... "A packet of condoms, some shaving gel, some shampoo and an NEC mobile phone please on a contract'

Duh!!!


Maybe Hutchison are looking to sell 3

I can remember when Freeserve CDS were kicked out of Dixons stores just before they got sold to Wanadoo (france telecom)

[Ben]

That's a very valid point, but in this instance it's Superdrug that wants to remove 3points, not Hutchison, which would suggest more of a conflict in business interests rather than the possibility of a sale.

[Jon3G]

very true..........

[3g-g]

My understanding was that Hutch own Superdrug, they bought the company just before 3 lanched to give them a highstreet presence, it was a cost cutting venture as high street retail prices were on the increace they could just dump a 3 sales corner into every SD store.

I can't understand where the conflict of interest would be as both outfits will be trying to make a profit for their owner, namely HTL. I can understand that possibly the SD staff are a bit peeved off with having to deal with irate 3 customers, but you would of thought they were used to that by now.

It does strike me as a bit lazy on Hutch not to have either; branched out and found standalone retail outlets for their product or have changed some of the existing SD stores into pure 3 fronted outlets. On the other hand, when you still dont really have that much product to sell I can see why they're happy to sit in with the cosmetics and condoms.

[3GScottishUser]

There is also the question of how long you expect to be around. Its easy to reallocate some space in SD to toiletries if/when the need arises.

[delinquentwoody]

Just out of interest, how are 3 selling their phones in other countries? Do they have stand alone shops, or have they done a similar thing elsewhere and bought a retail company to use some of their selling space?

[3GScottishUser]

They have 3 outlets in Australia (not that they seem to be doing them much good just now).

They use their own outlets in Hong Kong.

Not sure about Italy or Austria???

In Ireland they appear to have put off their launch until November now.

[kryten]

I can see the link between Nurofen and 3 staff...

But seriously, would you buy toiletries from a phone shop? No? So why would you buy Phones from a toiletries shop?



One solution would be partitioning the store between H3 and SD.