RICA takes retail toll


Following lower than expected customer sign-up to mobile operators this year, local retailers have also been hit by the new mobile phone registration law, ITWeb reports.

Retail companies have used the mobile market to diversify offerings and act as resellers for the large mobile operators; however, sales of phones and SIM cards have dropped and retailers are feeling the impact.

The Regulation of Interception of Communications and Provision of Communication-Related Information Act (RICA), which was implemented half way through this year, requires all mobile operators to register customer details, similar to the process used by the banks.

The new Act is intended to prevent crime, in the sense that police will now have details of where customers live and have access to customer details when needed.

A similar process was implemented in Australia; however, the country canned the law when it became apparent that it had a disastrous impact on cellphone sales.

Locally, the Act has hammered the mobile operators. Earlier this month, MTN announced RICA had knocked 5% off its South African customer base and Vodacom showed slowing connections by customers.

Now the law is taking its toll on retail mobile and SIM sales.

Despite intensive training and a focus on marketing and education, Brad Fly, Foschini Group’s GM for the retail technology division, says customers are still confused by the process.

He says they get irritated that they need to bring documentation to buy a starter pack or cellphone.

“We have absolutely felt the impact of the Act, although it is hard to separate out how much of an impact it has had,” he adds. The company took on Vodacom as a new supplier, after years of having an exclusive agreement with MTN. The company’s results also showed that there had been a supplier delivery problem, which impacted on sales.

Fly says Foschini hope the December-January period will see the bottom of the trouble, and he believes sales will pick up after that. Fly says the company anticipated the drop off in sales and, in expectation, the mobile operators also supplied a lower stock level.

Barry Knichel, director of general merchandise at Pick n Pay, says the company hasn’t seen a significant decrease in phone sales; however, there has been a knock on starter pack sales. The company has traditionally played a more significant role in starter pack sales and the sale of airtime.

The Edcon Group has seen a similar decline in sales, although the company says it’s too soon to tell how much it will affect its business.

Steve Ross, CEO at Edcon, says: “It definitely slowed down sales from the first day it launched. We’ve put training and signing programmes in place to assist the shopper, thus effectively cutting the wait and confusion. Our internal metrics show these steps are having a positive effect, but are not yet a complete offset to the implementation of RICA.”

Chris Gilmour, an analyst with Absa Investments, says it is not a surprise to see the dramatic impact on both mobile operators and retailers. “It is a draconian law,” he says. Gilmour adds that not even in the US and the UK have these kinds of laws been implemented.

He adds that it is also debatable whether the Act will be able to prevent crime, since there are most likely ways around the sign-up process to get access to the mobile networks. “It is unlikely that the legislation will be watertight,” he adds.

Retailers have joined the mobile operators in the hope that sales and customer sign-ups will increase next year.