Retail Observer

RETAILOBSERVER.COM OCTOBER 2015 50 Jim Sendrak Consumer Electronics Trends Jim Sendrak is executive VP of consumer electronics and marketing for MEGA Group USA. He has worked in the retail business helping to merchandise consumer electronics for three notable national and regional chains. In the late 1990s, Sendrak switched over to buying group management and currently helps the 1,700+ members of MEGA Group compete and profit in markets where "big box" retailers are so prolific. RO A n exciting change has been happening in the cell phone industry. Multi-year contracts locking you in with enormous penalties for breaking are becoming a way of the past. Frustrating limitations of specific phone models by carriers is becoming less of a problem. On August 1, 2014 President Obama signed a bipartisan bill into law that makes it easier for consumers to change their cell phone (and tablet) service providers without paying for a new device. The bill, known as the Unlocking Consumer Choice and Wireless Competition Act, reversed a Library of Congress decision that prevented consumers from "unlocking" their cell phones for use on other carrier's networks without permission. The intent of the bill is to give consumers greater choices and more flexibility when it comes to choosing phones and service providers. It also fosters greater competition between carriers and hardware manufacturers which generally lowers consumer prices. Some of you may remember back in 1982 when AT&T was forced by the government to break up the Bell Operating network which had essentially a monopoly on telephone service in the USA. While this is not exactly that, it's not unlike it either. Consumers now have many more choices available to them. Unlocked phones can be purchased at retail or on-line the same way you buy most other products. These phones can be activated on a number of networks (but not all). These phones may be activated as pre-paid or post-paid devices. You can also have your current phone unlocked by your carrier should you wish to continue using it on another network or abroad. (You must first complete the terms of your contract before your carrier will unlock your phone). The carrier-specific data resides in a phone on a SIM card (Subscriber Identity Module). This is a small card inside a cellular phone, carrying an identification number unique to the owner, storing personal data, and prevents operation if removed. It is the removal of this card and replacing it with one from a different carrier that allows the phone to be reactivated on a new network. Consumers who frequently travel abroad are loving this new option. They can easily place their existing phone on overseas networks and save a tremendous amount of money over high roaming charges. Some people would like to have the option of owning several different handsets. This gives them the option of doing that as well. All said, there are still some restrictions mostly of a technical nature. Unlocked phones currently work on carrier networks such as AT&T, T-Mobile and many pre-paid providers. They will not work on networks such as Verizon and Sprint. This is because these two groups of carriers operate on different networks; GSM and CDMA. We won't get into the technology here; just understand that this is why phones are not universally interchangeable. So what might this mean to you as an independent retailer? Who do you know that DOES NOT own one or more cellular telephones? Right, nobody. Every person walking into your establishment is a potential customer for a new phone. And with phone sales there are also accessory sales. You can stock phones and accessories without the need to have a carrier relationship and all of the headaches that come along with that. Contracts, chargebacks, etc. Clean, simple sales transactions. "But I don't sell electronics in my store", you say. What does it matter? You're a retailer first. What you choose to sell is your decision. Is there a more universal mid-ticket product category today than cellular telephones? What a great traffic builder. Advertise that you're in the business; unlocked phones, pre-paid phone packages, accessories, etc. Hassle free. You can even sell profitable product protection plans on these phones. Acquiring merchandise is easy. There are plenty of distributors around the country to choose from. Because you're dealing with small items, freight is never an issue. Some distributors even make displays available. Here is another out-side-of-the-box opportunity. With a wide open universal market available, you might want to give it some serious consideration. Your competition is or will be in the business for sure. UNLOCKING THE SECRETS OF UNLOCKED SMARTPHONES

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