Telecoms channel – Ripe for disintermediation

The results of our recent (2018) nationwide customer survey on telecoms retail experience are in and they don’t look good… not if you’re a telecoms operator. Once again, the numbers solidified the trend; customers are unhappy with the retail (store) experience and will try to avoid telecoms locations whenever they can.

With so much being invested in content (media assets and further investments) and infrastructure (5G), as well as B2B/IoT related topics (connected cars, for example) it is somewhat surprising to see so little attention paid to this critical customer touch-point. Telecoms operators have never really been good at offering an exciting retail experience but then again, times were different. There was less competition (the first Apple store opened in 2001) and much more of an urgency for the customer to accept the experience because alternative channels were not widely available. Obviously, this hasn’t been the case for a long time now; customers no longer need to go to a telecoms store. Think of the last time you had to go to one, been a while?

Although there are still transactions at telecoms shops, according to our research, the percentage of consumers purchasing phones from a telecoms store fell by half in just over two years. Given multiple pieces of evidence and the ever-increasing importance of going “D2C” (gathering data, building better relationships/loyalty, reducing go to market costs, etc.), it is clear that telecoms retail operations are ripe for disintermediation.

Purely selling product is not enough to support old school store economics, so telecoms operators need to:

• Diversify into adjacent consumer services/experiences/categories (e.g. repairs, customization, security, connected cars, smart home) and/or
• Change the nature of the store to get more manufacturer funding (e.g. more explicit showroom, using stores as interactive ad-space) and/or
• Change the shape and size of their retail formats (e.g. kiosks, vending machines, collection hubs, pop-up stores).
  In going through this strategic re-evaluation of the channel, telecoms operators also need to think about how IoT, personal data security and content fits into the equation. With the introduction of 5G and an ever-increasing set of products and services and growing concern over data privacy, customers will always (first) turn to telco operators for guidance.

These are exciting times with great opportunities for telecoms operators to re-purpose their large retail footprint, not just to improve operational efficiency/economics but to also to rediscover their relationship with the customer. Let’s hope they’re listening.