New Study Forecasts New Retail Push Around Tech Products, Services

Retail communications

New Study Forecasts New Retail Push Around Tech Products, Services

By Paula Bernier, Executive Editor, IP Communications Magazines  |  November 01, 2010

This article originally appeared in the November 2010 issue of INTERNET TELEPHONY

In a world in which online shopping has become mainstream, it seems a logical conclusion that sales of high-tech communications services and gear would be the first to migrate away from bricks-and-mortar locations and into the ether. While that has happened to some extent, news of popular retailers like Target selling the iPad and Wal-Mart coming out with its own branded post-paid wireless service, as just two examples, continues. Meanwhile, network operators like Verizon Wireless (News - Alert) like to push the latest smartphones and related services through their own branded locations – and such activities are expected to accelerate in the near future.

That may be because, as discussed in a new study by Accenture (News - Alert), most consumers like to see, feel and try new smartphones – and other communications devices and related services – before making a purchase.

In the Accenture consumer survey conducted earlier this year, more than 3,000 consumers in 18 countries were asked how the physical retail channel impacts their relationships with communications providers. Three out of four indicated they prefer shopping in a communication provider-owned store when buying a communications product or service.

That said, it appears that selling communications goods and services via physical retail stores is here to stay.

John Liesching, executive director of the retail communication practice at Accenture, says he’s seeing growth in communications services-focused retail in both mature and newer markets. Indeed, three out of four global communications providers plan to open more communication provider-owned retail stores over the next two years, according to Accenture.

About 62 percent of the providers represented in the survey operate retail stores in Europe, 38 percent in North America, 38 percent in Asia Pacific, 27 percent in India, and 16 percent in China. When asked about the geographic areas in which providers expect to increase the number of their company-owned stores, half said North America, 40 percent said China, 38 percent said Africa, 33 percent said India and 32 percent said Europe.

That data was collected during Accenture’s telephone interviews of 51 executives at communications companies with annual revenues of at least U.S. $500 million operating in 18 countries. The survey, which took place between January and March 2010, polled executives in charge of global retail operations. The majority of these individuals described their companies as converged service providers, while one-third were predominantly wireless telephony service providers. The others were described as providers of cable, satellite or wireline services.

Of that group, about 76 percent of respondents said they plan to increase the total number of storefronts through which they sell, primarily with communication provider-owned stores. Eighty-eight percent said a strong physical retail channel is either important or very important to their company's current growth strategy. And 84 percent said retail stores would remain important or extremely important over the next two years.

Overall, respondents expect the physical retail channel to represent a larger percentage of total annual sales over the next two years, growing from 43 percent to 50 percent. And about 75 percent of those executives expect to see growth from the small business and home office sector.

Liesching tells INTERNET TELEPHONY that both service providers and end users – whether young, old or somewhere in between – overwhelming value retail today and have the same expectation in future. In fact, he adds, consumers prefer to purchase and learn about products via retail more than through any other channel.

Of course, some high-tech companies, like the wireless service providers, are already out there with lots of retail locations. Liesching says AT&T, T-Mobile and Verizon each have about 2,000 branded stores, while Sprint (News - Alert) is somewhere in the 1,200 range.

Others like the cable TV companies historically have had service centers, but haven’t been big in traditional retail, he says. However, he notes, the traffic in these cableco service centers is enormous, so smart cablecos might want to figure out how to translate that traffic into sales by getting sales people involved or training service center people on how to upsell.

But whatever the service provider or retail outlet, Liesching continues, there clearly are significant opportunities to improve customers’ in-store experiences, drive new sales and build customer loyalty. One example of how to do all that is by providing training for store employees so they can better cater to individual customer needs, and customizing stores based on regional requirements, according to the Accenture study. In any case, he adds, companies that sell high-tech products and services via retail need to figure out how to differentiate their retail strategies from the pack.

That seemed to have worked for Apple (News - Alert), which garnered a lot of attention when it opened very high-end, heavily-manned stores in top tier cities like New York and Chicago. It later brought that concept to second and third tier markets, where it launched equally nice but smaller retail locations. These stores not only enable customers to touch and try many of Apple’s products, they also have helped build the company’s brand as one of value and coolness.

Microsoft (News - Alert) and Sony glommed on to the retail concept made famous by Apple by later opening up their own retail locations, which are trying to create a similar vibe.

Edited by Jaclyn Allard


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