Edcon embraces mobile technology

13 June 2010 - 01:49 By Survey: Cellphones
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The cellphone division of Edcon has been operating for 14 years and continues to bolster the retailer's bottom line, despite a brief setback in sales volumes after the introduction of the Regulation of Interception of Communications Act (RICA) in 2009

With more than four million account holders at Edcon, the division has access to the largest consumer database in South Africa. It is also able to buy the kinds of volumes that bring down over-the-counter prices.

"Cellphones, particularly at the entry level, continue to hold the same good sales proposition for us," said Ettienne Brandt, group cellular executive at Edcon.

"What has changed is that we now offer cellphone products in more of our retail chains - in department stores like Edgars, in discount chains like Jet and Legit, as well as at CNA.

"New, dedicated cellphone counters in stores are actually driving footfall, especially at Jet."

Brandt said sales, which slumped immediately after the implementation of RICA, have largely returned to normal as customers have come to grips with the legislation - cellphone buyers now require a green ID and proof of address. " The real impact lasted for four or five months. Handset sales are still on a positive growth curve, although SIM card sales have slowed. There has been no real effect in sales of airtime ."

Brandt said the trickling down of smartphone features to entry-level phones had changed the market. "Phones have become much more affordable; for example, an entry-level camera phone can be had for just R320. That end of the market has become much more vibrant since people now don't have to wait for hand-me-downs to get this kind of functionality."

While most in-store buyers are after pre-paid set-ups, Brandt said the group was starting to offer contracts with Vodacom and Cell C.

"BlackBerry is really beginning to take off because of the more affordable pricing options. We've seen a lot of sales of these devices being driven by the youth," Brandt said.

"A year ago sales of top-end phones like this were practically nil; right now they're just flying off the shelves. The two big factors at play are the cheaper phones at the bottom end of the market and the emergence of affordable smartphones. Smartphones make up just 5% of our market but 20% of turnover in pre-paid."

Brandt said smartphone sales were likely to grow exponentially as they were increasingly aimed at the mass market. "There is a lot of room to grow because of what phones like these can offer people in terms of social networking and browsing applications."

While smartphones are all the rage, outdated phones are a headache for those with an environmental conscience. Brandt said the Flipswap programme - whereby customers can hand in old handsets in exchange for a cash discount off the price of a new phone - was picking up.

"In the US, Flipswap offered money back for old phones and enjoyed a reasonably successful take-up, but second-hand prices erode so rapidly that there has been customer resistance to the idea in South Africa, where there is still such a need for good handsets that people still prefer to hand them down to family or friends," Brandt said.

"Thus far, programmes like Flipswap haven't transformed our business, but this will change as people become more environmentally conscious and good phones become more affordable.

"Flipswap, which is available at Edgars and CNA, will accept any phone. All handsets are shipped to the US, where they are recycled or refurbished for other developing markets where there is a greater need for useable handsets," he added.

Edcon is one of the first retailers to use cellphone technology to stay in touch with its customers. The group launched its mobi sites in October 2008 and its Legit and Jet outlets have each recorded between 5000 and 6000 page views a month, and the highest-recorded figures are near 40000.

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