Manishree Bhattacharya

Should telecom operators close down their stores?

Blog Post created by Manishree Bhattacharya on Feb 16, 2018

A perspective on advanced western economies - US, Europe (Originally posted on LinkedIn). 

Digitisation of the telecom sector – better later than never!

It is fair for the telecom industry to take adequate pride for facilitating digitisation across sectors. One should take cognizance of the fact that but for the mobility and connectivity enabled by the telecom players, the rapid rise of the Ubers and the PayPals of the world wouldn’t have been possible. The sector, in its modesty, actually paved way for industry buzzwords such as ‘e-wallets’, ‘e-health, ‘e-retail’, ‘e-travel’, among others. But what is surprising is that the sector itself has been left behind in creating enough value for itself, which has of course impacted revenue growths and margins.2 In fact, telecom stands only second to media in digital disruption, as highlighted in a 2016 study by HBR.1 Nevertheless, there is always an opportunity to pivot – important is how one adopts and executes. 

 

 

The similar goes for the telecom sector, which is now trying to digitise its core by the following means:

  • Building talent and capabilities
  • Using data-driven analytics for streamlining businesses
  • Harnessing digital channels for customer engagement; at the same time improving experience across touch-points
  • Integrating products and services from adjacent industries to spread across the value-chain

Customer experience at the heart of digitisation

At the heart of this transition lies customer experience – making buying experiences simpler, easier, faster, IMMERSIVE, ENTERTAINING, and MEMORABLE. From a buying perspective, the first three quite very well defines online, whereas the last three indicates what a retail store can offer. To delve deeper, and adequately answer whether in the western economies mobile stores will continue to have a relevance in the digital world, let us review some statistics2:

 

The above data highlights that consumers will want to do more than the mundane with their mobile phones – more immersive experiences using AR and VR; and more connectivity to things around them. So, although as per a Mckinsey analysis3, investing in digital sales had enabled some of the telecom leaders to boost revenues by 30 percent, doing away with retail stores had never been indicated, because the emphasis is always on greater customer experience across various touch-points – both digital and physical. 
Similarly, important it is to use data-driven consumer insights to decide what sells well online vis-a-vis offline, thus, creating and selling appropriate product-service bundle across various channels. 

Telecom’s foray to media, entertainment and IoT – necessitates the need for next-gen retail stores, for better customer experience

As discussed earlier, reciprocating to digitisation and in an effort to create compelling value proposition, the telecom companies, particularly in the US, are looking towards expanding their core offerings, foraying into content, media, entertainment, and connectivity. Let us have a look at the following examples:

  • Verizon’s acquisition of Yahoo (2017)4; acquisition of Fleetmatics and Telogis in the Telematics space5 (2016)
  • AT&T’s proposed merger with Time Warner6 (2017)
  • Deutsche Telekom, Orange, Singtel, and Telefónica - joint selection of start-ups in the IoT space to develop newer technologies (2017)7

 

All these indicative of the changing business models of these companies, who are now beginning to offer solutions, which are more experience-driven - prompting the need for consumers to visit physical stores. The change is also from ‘traditional retail stores’ to ‘next-gen retail stores’, which provide immersive experiences and engage deeply with customers. Take Verizon’s next-gen retail store for example, which is intuitive, consumer-friendly, store-staff friendly, and takes retail store experience to a new level. Verizon’s head of design highlights that the entire look and feel is the outcome of research, which gave them several insights that got translated into meaningful designs, namely:

 

Customers want the same experience as that of online – The Verizon store has a ‘Suggested Items’ section next to complementary products – just like online purchasing

 

Many shoppers come with an idea in mind, having done some online research – hence, the store allows adequate touch and feel of the products

 

Technology should not be used just for the sake of it – Verizon has not gone completely bot-crazy stating that customers don’t come to stores just for a transactional interaction, but for deeper human expertise. Although, bots can be used for admin purposes, so that store staffs can engage in more interactive discussions.

 

The store also has a collaboration/social zone (coffee shop), where customers can come together and discuss technology. A large amount of the floor space has also been dedicated to Virtual Reality experience, which takes the store experience to a whole new level.

 

Verizon is not just the only one; AT&T has begun launch of its concept entertainment stores, offering modern merchandise such as virtual reality and streaming devices. Again, the experience is very much digital – no cash registers, and employees use iPhone to process orders.

Melissa Bahoora, director of sales for the Greater Los Angeles Area, AT&T says9, “If you think of AT&T, you think of a place to get your phone. We wanted a place where you could get other things as well — like your TV service.” – indicating that the telecom companies of today want to spread across products and services, to become a one-stop stop, to create long-lasting customer relation, and improve their overall value proposition.

 

 

So, although most of these companies are investing and exploring various digital touch-points such as mobile-apps, social media, and virtual assistants, their focus on offline retail stores continues, with a bigger objective and momentum.

Perhaps, this is not the right time yet for the telecom operators to close down their stores. Thriving in ‘VUCA’ times is tough, but seems like the telecom players want to fight along.

 

Source:

1 ‘’The Industries That Are Being Disrupted the Most by Digital,’’ – by Harvard Business review, 2016

2 “How telecom companies can win in the digital revolution,’’ – by Mckinsey, 2016

3 “Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2016–2021,” - White Paper by CISCO

4 CNBC News Article

5 Verizon Annual Report - 2016

6 Forbes Article

7 WebWire Article

8 “What can we Learn from Verizon’s Next Gen Retail Experiences?” – Huffington Post, 2017

9 The Orange County Register, 2017

 

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