Store refits in East London and Swindon form part of a plan to transform its retail business
Carphone Warehouse has started trials of a new concept format in two of its stores as part of a multi-million pound investment to transform its retail business.
The tests commenced at its shops in the Stratford Shopping Centre in East London and in Swindon, Wiltshire earlier this month.
Their performance will be monitored for around 12 weeks and if successful, the concept will be rolled out to additional stores next year and could eventually be spread across its 750-strong retail estate over the following months.
Tests for this new format have taken place throughout this year at its merchandising facility at Dixons Carphone headquarters in Acton, West London throughout this year.
The two stores took two-and-a-half weeks to refit – slightly longer than the 10-12 day timespan normally required for an average refurbishment of a shop.
Carphone Warehouse UK and Ireland managing director Jeremy Fennell first unveiled details of the concept to Mobile News at Mobile World Congress in Barcelona in February, and recently revealed the investment in the new stores was “enormous”.
It follows a multi-million pound investment to revamp its web platform earlier this year, something he labelled “archaic” at the industry’s largest global trade show.
Customer insight
Speaking exclusively to Mobile News at its Stratford store, Fennell said: “We have not gone and done a one-off, very expensive format fixture review. We’re aiming to look at where customers are shopping for mobile phones, accessories and associated services, and looking at where that is heading over the next 24-36 months.
“Here we are trialling some different ideas around what we see the Carphone Warehouse format of the future being. It is done with a similar sort of fixture and fit-out cost to what we do usually, [so] we can take the elements of it and roll them out to the rest of the estate.
“What you see here is a refresh or regeneration of what Carphone is and stands for, which is perhaps more appropriate to the customer of the present and future.”
Look and feel
The various elements around the store refits have come off the back of customer feedback over their preferred shopping experience and industry trends Carphone has identified as being popular over the coming months and years.
Smartphones are now securely placed on metal tables running through the centre of the store, and are all switched on, unlocked and running demos for customers to feel, try and compare to others nearby.
There are also metal stools for customers to sit on while doing this, all part of the retailer attempting to create a more relaxed and homely feel in-store.
Samsung and Apple have dedicated displays for their devices. Fennell said more time and space has been given to them because they account for a “very high share of our sales”. According to figures from IDC, the manufacturers accounted for nearly a third of global smartphone sales in Q3.
Perhaps the biggest change in the store format is around mobile phone accessories, which are given a noticeable amount of additional space.
At the Stratford store, they are now placed along almost the entire right hand wall and out from behind the custom position of behind the staff counter.
The range, which includes cases, chargers, power banks, speakers and screen protectors, enable customers to get close-up to them as opposed to viewing them from a distance and in some cases, having to wait for staff assistance.
Carphone’s headphone range is also noticeably larger than in its other stores. This is an open and live display, enabling customers to get hands-on with the products and for them to plug their phone in, listen to music and see what is most suitable for them.
The retailer’s increased focus on these products is already being justified. According to staff in the Stratford store, accessory sales have increased by 50 per cent since the refit debuted.
Carphone also appears to have done its homework on a market where smartphone growth is slowing. In August, Future Market Insights predicted the value of the global mobile phone accessories market will grow at a compound annual growth rate of 6.9 per cent to reach nearly £100 billion by 2025.
Alongside accessories in the Stratford outlet is a dedicated section for wearables, including several variants of smartwatch from Apple and Samsung, as well as products from the likes of Sony and Fitbit.
This is followed by a section dedicated to virtual reality, stocking headsets from Samsung and Google, as well as its own branded headset, Goji. Carphone is expecting sales of these products to double in the lead up to Christmas.
“We’ve expanded that beyond accessories into some high-value experience products around connectivity to the phone, particularly around wearables and VR headsets,” said Fennell. “This is a nod towards the expansion of the mobile user experience across other products.
“We opted not to do an all-singing, all-dancing Internet of Things-style thing and have instead listened to customers to see where they see the relevance, where the key products are, when they are buying a mobile phone and how we can be relevant within that conversation.
“Virtual reality is clearly the big thing this year and will be big this Christmas, both from a standalone accessory sale but also from an attached sale to the phone itself. We have bought into this quite heavily.”
Carphone has also given iD Mobile – its MVNO running off the Three network that launched in May 2015 – as well as various SIM-only deals, their own dedicated spaces.
It has identified these as additional key growth areas over the coming years. According to a report from YouGov earlier this year, MVNO share of the UK smartphone market doubled to 28 per cent from December 2010 to March 2016.
The same report revealed that the number of smartphone owners on SIM-only deals has almost quadrupled to 19 per cent in the same period.
Network presence
On a wider scale, Carphone has also dedicated more space throughout the stores to inform customers of the networks it offers mobile connections for, forming part of its ‘We Compare. You Save’ slogan. It claims to compare the UK’s widest range of networks and if a customer finds a cheaper deal, it promises to match it and pay for their first month.
There is a large screen on the wall at the rear of the shop that displays all the mobile operator logos, as well as current promotions and a push towards its Geek Squad service.
On the walls are posters and on-screen visuals displaying what the main benefits of each of the networks are.
All staff are equipped with Pin Point, the assisted sales tool that was launched in August 2013 and backed by a multi-million pound investment to build and promote it.
Customer service assistants use tablets to help customers build a contract that best suits their needs, allowing them to compare tens of thousands of tariff combinations.
They are quizzed on their current usage and can compare their chosen handset against a similar device with a full list of specifications and customer reviews linked directly to the Carphone website. Customers can also use a coverage checker to see the quality of 3G and 4G in their area from each network.
Pin Point then calculates what a customer would ideally require on both 3G and 4G over the course of a two-year deal and how much it would cost each month with the chosen handset.
The trade-in price of the current handset is also shown, which can contribute to the upfront cost of their new device or monthly line rental of the new contract. The end of the process also explains the service Geek Squad provides, such as the transfer of content from the old to new device, and the insurance policies it offers in comparison with others.
Fennell said: “This is back to that compare and save message. You will see a lot of visibility around that. We’re presenting our sales and propositions to customers to make it very clear that we have all of the handsets, networks, you can compare across all of the different options and tariffs and save as much as possible.
“This is a really good customer journey that is now complemented by a more obvious nod to all of the networks that we sell, as well as the comparison and save message, which really emphasises what we do and what we stand for.”
Geek Squad presence
Carphone also advertises its ability to repair mobile phones on the main shop window, with space for its Geek Squad operation situated in-store.
In some of its stores, the retailer operates a full repair service where customers can get their phone fixed within hours while in others, it sends them off to be repaired elsewhere.
In the Stratford store there currently isn’t space for a full repair centre but there is a dedicated section for a Geek Squad member to diagnose the problem with a device and recommend the best course of action for it.
If it is decided it needs to be repaired, it will be sent away and returned to the customer within seven days. However, at the end of this month, that service will be boosted dramatically.
“We will introduce a same-day repair service into [the Stratford store], which is a nod to where we are going with the rest of the stores,” said Fennell.
“For example, we will be able to do a full screen repair within two hours of a customer entering the store. That is a big proposition change and a slight change to the format to make that stand out more.”
Carphone has also introduced Qudini into the stores, a cloud-based queue and appointment management system that is also used by the likes of O2, John Lewis and House of Fraser, aimed at boosting the customer experience and service.
If they come into store at a busy time and request to speak to a member of staff, their name will be taken and will appear on a television screen along with a short reference number.
When a member of staff becomes available, the system texts the customer to notify them, enabling them to leave the store if necessary to prioritise other things rather than jostling for position in a queue over long periods.
Relaxed atmosphere
Despite these numerous additions to improve the customer experience, Fennell said Carphone has opted for a more relaxed and contemporary feel with the refit, providing customers with more space to move around. The lighting is brighter and the store has more of a warehouse feel to it.
There is also an area at the back for customer consultation, where staff members can sit down with customers to go through their chosen deal, enter personal details into the system and perform credit checks. A coffee machine also offers customers hot beverages while they are in-store.
“This is an incredibly important purchase for customers so it is important for them to try the smartphones out on live display, and in some stores, pick them up off the desks and get a proper feel for them,” added Fennell.
“It’s about making it a more interactive process where customers can relax into it rather than feel pressured from standing at the point of sale.
“Customers have told us they wanted somewhere to sit down, wanted to feel more relaxed while they were waiting. They said that it would be nice to sit down with a refreshment [when] they were with our staff for 20 minutes [to make] the right decision on what they were buying.
“They told us they wanted to see the phones, feel and compare them in a more consistent environment. This is a much warmer environment, not only for shopping in, but also to work within as well.”
Future-proof
Despite all the numerous changes and additions to the stores in Stratford and Swindon, Fennell insists Carphone hasn’t overspent to introduce revolutionary ideas.
He maintains Carphone’s two stores are different and not aimed at revolutionising the way it operates and portrays itself to customers, but is more aimed at forming a sustainable and flexible format so the idea could be rolled out to its entire 750 store estate if required.
Fennell adds that Carphone’s £3.6 billion merger with Dixons Retail in August 2014 has provided it with the necessary scale to undergo these trials, resulting in it becoming a better retailer than it was as a standalone business.
“When you strip out a store with an all-singing and all-dancing feeling, that’s fantastic. Those stores are great and we do a lot of them ourselves, and some other competitors have done too
“This isn’t about creating a one-off, all-singing and all-dancing flagship. It is about creating something sustainable so if I were to choose to roll it out into 20, 30 or 40 more stores over the next 12 months, I could do so using the same budget as I would to refit those stores in the current format. This is very much a future-proof, scalable exercise.
“We are also getting scale through the larger operation that we have as a combined business since the merger with Dixons Retail, which we can use to influence the project as well.
“You can see we are becoming a better retailer together than we might have been standing alone in the past.”
Fennell said the retailer was never tempted to begin the trial of its new concept format in its much larger store in Westfield Stratford City – located directly opposite the Stratford Centre this store is based within.
He felt that by testing it in the large popular shopping centre chain, the results of the trials wouldn’t have been representative of its other stores or a fair reflection of how it really performed.
“We have trialled this here and in Swindon because they are both high trading outlets. It makes it easier to test the new format and understand how it works
“We’ve moved away from performing trials in high priority locations like Oxford Street and Westfield to ensure we test things in stores that are more representative across our estate.
“Back to the concept – if it works, we’ll roll it out. So don’t do it somewhere that is unique, different or quirky but do it somewhere that is normal – a store that is average in size, has average traffic coming in. That makes it a more sustainable trial.
High street leadership
Carphone is arguably out on its own when it comes to leadership within the independent mobile phone retailer space, especially since the collapse of its main competitor Phones 4u in September 2014, which saw it disappear from the high street with loss of several hundred stores.
Apart from O2 last year, with the opening of its concept stores, the mobile operators have made very little noise about any refreshments to their store format, instead focusing on enhancing the experience it has with customers with various value-added services and content deals.
However, Fennell refuses to be drawn on whether the launch of the new trials and the early success he has seen from it puts it even further ahead of its competitors, cementing its position as one the UK’s leading retailers.
He claims “only time will tell” if that is the case, with customer feedback being key to its success.
“We have listened to an awful lot of customer and staff feedback and taken an awful lot of that on board,” said Fennell.
“Back to why we have done this project, it is about answering those questions; combining it with the insight we have as to where the market is going over the next few years; and putting together a sustainable, workable and logistically possible, cost-efficient solution, and that’s what this is.
“Whether we run this right or not, only time will tell. The sales we achieve and customer feedback we receive will tell us that. Having been trading for nearly two weeks, sales have been good so far.”