Pepkor, a JSE-listed retailer renowned for quality clothing at discounted prices, has quietly entered the smartphone market. The Pep clothing retail arm sold 8-million cellular handsets in one year, with 50% being smartphones.
Pepkor has also introduced a cellular handset rental option called FoneYam at 180 Pep and Ackermans stores by December 2023.
The retailer said FoneYam has now been rolled out to 1 000 stores.
Today, Pepkor disclosed that FoneYam cellular handset rental product, which makes smartphones affordable and accessible to customers, was rolled out further with more than 200 000 active FoneYam customers by the end of the six months to March 31.
“Customer demand remains strong, fuelling activation rates,” said Pepkor.
“The monthly customer activation rate reached 60 000 handsets and continues to accelerate. The FoneYam cellular rental book amounts to R258 million (gross) with an initial provision level of 16%.”
Pepkor also disclosed that the group sells seven out of 10 prepaid smartphones in South Africa ( according to GfK1 data) and 5.6 million cellular handsets were sold during the period, 58% of which were smartphones.
Private label cellular handsets such as Stylo and Premio contribute 18% to the product mix and achieve higher gross profit margins.
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While it is undeniable that South Africans love mobile phones, many still rely on dated, basic 2G or 3G, devices. Smartphone costs are prohibitive for the working class.
The cost can exceed 30% of an individual’s take-home pay, which presents a considerable barrier to widespread adoption.
On top of that, the costs of owning a smartphone extend beyond the initial purchase price. Unlike feature phones, smartphones consume large amounts of data to provide enhanced services. For low-income users, additional data costs can be daunting, further hindering smartphone adoption. This dilemma poses a significant challenge for major operators such as Vodacom, MTN and Telkom, which have invested heavily in 4G and 5G networks.
The success of these investments hinges on more users moving to advanced technologies, yet the price of devices and data remains beyond the reach of many.
