Vodafone and Carphone Warehouse: brands bite back

I’m fascinated by the bold move of Vodafone to pull all of its business out of The Carphone Warehouse (CPW), the UK’s leading mobile phone retailer. In future, Vodafone will sell only through Phones4U, and its own growing chain of Vodafone stores. CPW said they were not concerned by the move. Investors chose to disagree, sending the company’s shares down 10%.

For a long time CPW have had the upper hand in the relationship with the network providers, in the same way that the supermarket chains have do with most consumer goods brands. They even until recently managed customer service and billing for Vodafone. Also, CPW have contributed to the huge "churn" that goes on in mobile, by playing the brands off against one another and encouraging consumers to switch provider for a better deal/phone. Again, there is a parallel in grocery stores where retailers encourage price promotions that make consumers switch brands.

Time will see what happens to Vodafone’s business, but hats off to them for the boldness of their move, and for refusing to be "bullied" any more by the retailer. They have made distribution strategic, and tried to take more control of how their brand is sold. There are even rumours that another leading mobile network brand, Orange, will follow the Vodafone example and pull out of CPW.

5-minute workout: who has the power and upper hand in your distribution channels? If you are a product/service brand, what could you do to take more control, such as strategic alliances and developing your own route to market?