Communications providers say the retail channel is essential for success, but stores must evolve to match consumers’ needs
Three out of four global communications providers plan to open more communication provider-owned retail stores over the next two years and must cultivate an improved customer-focused experience to succeed, according to research by Accenture.
Accenture surveyed senior executives at the world’s largest communications providers to determine if retail stores are critical to attracting and retaining customers in an age of increasing online interactions.
The executives cited three main reasons for increasing the focus on their retail operations: their customers demand stores for making purchases and interacting with providers; the stores give providers a chance to effectively up-sell and cross-sell; and, providers can teach customers how to use their products and services.
In an 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 based on their retail store visits, in-store experiences and expectations. According to that survey, three out of four consumers prefer shopping in a communication provider-owned store when buying a communications product or service.
“We think operators can better leverage one of their most effective tools: the retail store,” said John Liesching, executive director, retail, Communication practice, Accenture. “Our research has revealed that consumers want and value a compelling experience at the point of purchase which is especially important as devices become more and more complex. Our research confirmed that consumers want to touch and feel these devices, as well as learn how to get the most out of them – and the store becomes the perfect place for that experience. There is mounting evidence that the retail channel will be crucial to communications providers’ future success.”
The recent Accenture survey of providers found that:
1. More than three-quarters of respondents (76 per cent) said they plan to increase the total number of storefronts through which they sell, primarily with communication provider-owned stores.
2. Eighty-eight per cent of executives said a strong physical retail channel is either important or very important to their company’s current growth strategy, and 84 per cent of those surveyed said retail stores would remain important or extremely important over the next two years.
3. Respondents expect the physical retail channel to represent a larger percentage of total annual sales over the next two years, growing from 43 per cent to 50 per cent.
4. Sixty-two per cent of the providers represented in the survey operate retail stores in Europe, 38 per cent in North America, 38 per cent in Asia Pacific, 27 per cent in India, and 16 per cent in China. When asked about the geographic areas in which providers expect to increase the number of their company-owned stores, half (50 per cent) said North America, 40 per cent said China, 38 per cent said Africa, 33 per cent said India and 32 per cent said Europe.
Growth seen in targeting small businesses, home-office users
Nearly all (98 per cent) respondents said their company would continue to use storefronts to target consumers over the next two years, with an increased focus on small businesses and home-office customers. Seventy-five per cent foresee growth among small- business and home-office users. In fact, according to the respondents, communications providers will increase their focus on small businesses by 10 per cent over the next two years – from 43 per cent today to 53 per cent. In addition, the focus on medium-sized and large enterprises in service providers stores is expected to grow at a relatively slow pace, growing four per cent for medium-sized businesses (from 16 per cent, to 20 per cent), and growing two per cent for large businesses (from 12 per cent, to 14 per cent).
According to the research findings, respondents’ views differ regarding the way their retail stores are performing. On the positive side, respondents think their companies perform well or extremely well in choosing a store site (70 per cent), educating and training store employees (65 per cent), managing store inventory (64 per cent), and closing stores that aren’t meeting revenue goals (56 per cent).
By comparison, less than half (49 per cent) of the executives said their companies’ stores performed well or extremely well in understanding the needs and behaviors of customers in each store’s geographic area, creating differentiated products, promotions and events (44 per cent), integrating sustainability into store operations (42 per cent), and hiring store managers with experience in other retail segments, integrating stores with other channels and tailoring store design and offerings to customers (35 per cent).
“As the complexity of capabilities increases, the providers’ ability to deliver those capabilities decreases,” said Liesching. “This is a perfect opportunity for some providers to capture market share by accelerating their retail capabilities to fulfill consumer needs.”
In the earlier Accenture consumer survey, three out of four consumers said they are not very satisfied with the store experience and rated it only slightly better than average, reflecting the providers’ assessments regarding their stores’ performance.
Survey shows room for improvement in effectiveness of providers’ retail operations
Executives were also asked about their companies’ maturity in six key retail capabilities: standardised operating procedures, talent management, information systems, performance metrics, supply chain and use of analytical tools. Having a standardised business process across all stores was rated the highest (67 per cent), while analytical tools was rated the lowest (30 per cent).
The survey identified a sub-set of providers, termed “leaders,” whose executives said they had mature retail capabilities across the six key retail attributes. “Our research suggests a strong correlation between robust retail capabilities and strong store performance,” Liesching said.
According to the research, leaders said their store sales accounted for 38 per cent of their total sales revenue, compared with providers whose retail capabilities were rated less mature across the six categories and whose sales account for 23 per cent of total sales revenue. Forty-two per cent of leaders expect their total sales revenue in retail stores to increase over the next two years; 26 per cent of the providers with less-mature retail capabilities said they expect their total sales revenue at retail stores to increase over the same time period.
“Many companies are aggressively building stores to develop and strengthen relationships with consumers,“ Liesching said. “As they embark on their retail push, communications providers should set their strategy, integrate the channels to provide a consistent level of service across all retail channels - stores, the web, call centers, kiosks or franchises - to create an experience that makes it easy for consumers to purchase new products and services. This means they must ensure that staff is trained and knowledgeable, able to manage inventory to meet customers’ needs – and lastly, but most importantly, understand the customer by geography and segment.