Orange to review high-street strategy

The day after Vodafone goes exclusive with Phones 4u, Orange says its own relationship with the big phone retail chains could change

Orange has revealed it is reviewing its high-street strategy, particularly with regard to the big two phone chains Carphone Warehouse and Phones4u.

The news comes the day after Vodafone announced it would no longer sell phone contracts through Carphone Warehouse but would instead deal exclusively with Phones 4u, prompting speculation that Vodafone now viewed the phone chain as a rival rather than a sales channel .

That move prompted a startling rebuke from Carphone Warehouse, claiming not only that Vodafone had approached it first proposing exclusivity, but that Phones4u's deal with the operator was based on "guaranteeing volumes of sales for networks" rather than maintaining an impartial standpoint.

"Our relationship both with Carphone Warehouse and Phones 4u remains unchanged; however, since our indirect distribution costs have gone up significantly over the last few years, we are in the process of reviewing our independent strategy for 2007," an Orange spokesperson said on Friday.

However, analysts have questioned Vodafone's wisdom in its Phones 4u tie-in, with Ovum's Jonathan Arber asking whether an exclusivity deal "is really necessary".

"Vodafone must be pretty confident in Phones4u's potential as a sales channel if it's willing to turn its back on the rest of the high street," Arber said on Thursday, adding that it was questionable whether Vodafone's drive to "bring as many aspects of its direct sales activities as possible under its control" was worth shutting out Carphone Warehouse, the current high-street leader.

Another major UK high-street phone chain, The Link, was bought recently by operator O2, although several of its stores were sold to Carphone Warehouse. All five mobile operators have spent recent years building up their portfolios of own-branded shops.