Harrison: Carphone had “too many chiefs”

Carphone Warehouse chief operating officer John Durkan and retail managing director Anthony Catterson were last week asked to step down from their roles by UK chief executive Andrew Harrison.

Harrison is to seize direct control of the UK business again, after overseeing its expansion in Europe and the US. He suggested he was concerned “too many chiefs” in Carphone UK threatened to hold up retail growth in new areas, principally broadband and laptop sales.

Durkan and Catterson both declined the chance of new roles within the business. Around 50 middle management roles have also gone. All redundancies are scheduled for the end of April.

Said Harrison: “I take direct charge of retail, trading and marketing functions and all the support functions. There were lots of layers in the organisation; too many chiefs.”

He went on: “The scale of the UK opportunity has led me to re-focus on this market. I have got a clear vision of what I want and a clear line of sight now to customers and stores.”

Carphone has also constructed a “Chinese wall” down the middle of its Acton business. It has split operations between retail and distribution and its own telecoms businesses TalkTalk and AOL, in an attempt to recreate a sense of impartiality for network suppliers.

Harrison said the move is not down to pressure from networks, looking to sell their fixed-line broadband products alongside its TalkTalk and AOL propositions.

“Our strategy in retail is to sell lots of other services, and to be impartial, so we have created this Chinese wall – so there is this clear division for the networks,” he said. “It’s got nothing to do with pressure [from the networks]; it is common sense.”

Harrison said Carphone had seen the first “green shoots” of a new growth phase in mobile retail during the quarter ending March 30, during which it increased its airtime connections by 12 per cent annually, even as broadband additions missed targets (see box, below).

He put this second wind down to surging public interest in mobile broadband and data services, in the face of declining interest in straight talktime in a saturated market place.

“The mobile market has seen a whole new wave of growth compared with 12 or 18 months ago. It’s been a good quarter on the mobile side, and we’ve done well because of our focus on mobile broadband. That’s really shone for us in a tough consumer market – things like the iPhone, broadband and mobile broadband, those new areas, have worked well.

“There is real excitement that this part of the mobile market – this part of high street retail – has got momentum; because most markets don’t get a second wave of growth like this,” he said.

Harrison added: “Our strategy is to move away from straight handset sales into this wireless world of the future.

“We can do the same kind of thing for laptops that we’ve done for mobile phones, so people start to think laptops come as part of a package, upgradeable after 18 months.

“We are working with the networks to drive revenue and services and usage.

“This strategy for change in the business, in trying to move the business from selling one thing to another, is quite a task, and that is the reason for the restructure.”