Re-owning the retail space

Leading European and Australian mobile operators invested millions back in 2008 buying back and revamping their retail stores. The next year, a leading software provider opened its first retail store. In 2010, a leading ASEAN wireless operator announced it would invest millions to triple its branded store base.  In the era of online communications, digital consumers and cost-to-serve reduction, significant investments in retail stores can surprise.

Over the last two decades, providers invested in digital channels such as web and mobile. They increased awareness, improved usability and provided incentives to lure customers toward those channels, expecting better efficiencies and cost savings.

Operators outsourced or closed their retail operations, even shutting down flagship stores and relying more heavily on dealers and trade partners.

So, why the recent change?

Retail does matter

Digital channels and online transactions have grown significantly, thanks to operators' efforts to simplify navigation, improve information and increase functionalities. For example, the phone channel is heavily used for reporting faulty equipment or service issues, making a complaint or getting technical assistance. The web is used for quick service transactions such as renewing service contracts, performing billing inquiries and updating personal details when these services are available, as well as to learn about new services and promotions and compare competing offerings. Digital channels play an important role in interactions between operators and customers.

However, consumers still value in-store experience, physical contacts with handsets before purchase and the presence of customer service representatives to educate or serve them. An Accenture survey found:

• Retail is important for both consumers (75% of respondents feel that physical retail stores will remain as an important channel) and providers (rating of the importance of retail in their growth strategy was 4.43 out of 5). In Asia 77% of respondents stated that need for retail (vs. online stores) will increase in the next two years.
• The physical retail store is the preferred channel of consumers for purchases and service or product education.
• The availability of products (No. 1 with 56% of responses) and knowledge of store personnel (No. 2 with 54% of responses) are the most desired store attributes.

Given consumer preferences, the retail store is a perfect avenue for service providers to increase their share of the customer wallet through cross- and up-sell of relevant products and services, as well as to introduce new, innovative and possibly complex products and services. It is also an opportunity for a unique customer experience.

In that context, we observe a significant and recent shift in operators (and handset manufacturers) strategies to re-own the retail space.