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Can Carphone Warehouse crack the States?

Posted in General, Marketing, Branwell Johnson, Latest reporters' blogs April 27th, 2007 by Branwell Johnson

There are few British companies with the “vaulting ambition” to leap across the Atlantic and even fewer that have not returned with a bloody nose.

However, right now both Tesco and Burberry are forging ahead with new outlets to bring some British retailing know-how and flair to the Americans. The former aims to have 100 stores by February next year and Burberry has 50 outlets.

About to join their ranks, albeit not under its own brand name, is Carphone Warehouse. The restless CEO Charles Dunstone wants to export the company’s way of selling to the Land of the Free and also further afield in Europe.

There’s no denying Carphone Warehouse is a high profile brand, though not necessarily in a positive way. The past year has seen widespread negative coverage of the poor levels of customer service and the connection backlog for its Talk Talk broadband offering and the company was caught up in the furore surrounding this year’s Celebrity Big Brother, ultimately relinquishing its sponsorship of the show. Its Buzz, a rating measured by YouGov’s Brand Index, fell from 4 to -4 between 2005 and 2006.

Is the company biting off more than it can chew in embarking on a Stateside expedition right now? The management team would deny this and the strategy being deployed is carefully devised to avoid any over-extension. Carphone Warehouse is partnering with Best Buy, the US equivalent of Dixons, for the initiative and it’s the Best Buy name that stands above the trial store in Manhattan. Apparently there are no plans to introduce the Carphone Warehouse name if the concept does roll out to other Best Buy stores.

The company believes there is an opportunity in the US for a number of reasons. For a start, the US lags in mobile network connections with 82 per cent penetration, compared to the UK’s 118 per cent (some people having two network contracts), according to the Wireless Intelligence Association.

Carphone Warehouse hopes to export its positioning as a source of independent advice and “the customers’ champion” via Best Buy. In the US the mobile retail market is nowhere near as competitive as in the UK and outlets tend to support only one or two handset or network suppliers. Carphone Warehouse is not assuming it can transfer UK attitudes wholesale. It is treading warily and researching the US market and customer attitudes but is confident that the company approach, summed up in the strapline “Your phone, your way”, can make inroads.

It does make one wonder if advertising agency Clemmow Hornby Inge, which holds the Carphone Warehouse business, had an inkling of the company’s expansionist plans when they negotiated with Sir Martin Sorrell to a 49 per cent stake to WPP Group. There’s no guarantee the agency will be developing marketing work for the US – but the smart money is on CHI know-how influencing marketing communications for Best Buy.

A cautious approach backed with consumer insight might just set both the mobiles and tills ringing for this latest Carphone Warehouse venture.