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Vita Group guns for new Telstra stores

Vita Group guns for new Telstra stores

Joint CEO expects “a fair amount of growth” from Telstra’s decision

Tech reseller, Vita Group (ASX:VTG), is set to get “a fair amount of growth” as it applies to operate many of Telstra’s 100 new stores around Australia.

The news comes as Telstra (ASX:TLS) reveals most of the stores will be handed over to resellers and licensees, rather than run internally. The first shop will be in Townsville and licensed to Vita Group.

Vita Group joint CEO, Maxine Horne, said Telstra has set up a process through which independent licensees and Vita Group will apply and compete for permission to open the new stores.

She claims applicants would need to demonstrate an ability to hit key financial targets and operate a store in a location that doesn’t already have too many Telstra stores.

“A lot of data needs to be gathered first…it’s a little bit early to tell [how many stores Vita Group would apply for],” she said. “But I would anticipate that this will mean a fair amount of growth for Vita Group.”

Horne said the new stores would likely be smaller than the traditional Fone Zone and T[life] stores Vita Group currently operates for Telstra.

“It will be targeting the top selling units in the industry, as opposed to having a wide range [of products],” she said. “There’s a much greater range of accessories that complement the original purchase.”

While Horne agreed Telstra’s push for more online sales would compete with in-store business, she claimed the majority of the market would want the value-added services offered by shop staff especially given the rising popularity and complexity of smart phones.

“The handsets literally change every three months so there’s quite a bit of user training that’s required,” she said. “Yes, there’ll be a number of people that think they’re capable of taking on everything straight away…but the vast majority of people need somebody else to do it for them.”

Horne also claimed the company did not wish to be part of union-style collective bargaining rights recently granted to more than 150 independent Telstra shops from the Telstra Licensed Shop Association (TLSA) because her company already received volume discounts.

The news had a largely positive effect on Vita Group’s share price when first announced. It rose 8.93 per cent to $0.305 a share on February 21, but fell 3.28 per cent to $0.295 at close of trading today.

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Tags Telstravita groupFone ZoneTelstra Licensed Shop Association (TLSA)T[life]

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