Looking back on 2020, there were some major trends and events that resulted in massive industry changes, disrupted the market, and are still creating significant threats to existing wireless businesses. Here’s a look, taken from our recent whitepaper The State of the Telecom Retail Industry, at the five biggest factors affecting the industry today.
1. Mergers and acquisitions
The first major set of changes in the telecom sector has been caused by industry mergers and acquisitions.
The T-Mobile and Sprint merger was finalized, consolidating two of the US market’s top-tier carriers. This resulted in the divesting of Boost doors and enabled wireline player, Dish, to become the fourth entrant in the US wireless space.
Canada saw the official launch of Shaw Mobile, following Shaw’s acquisition of Freedom Mobile in 2016.
One of the later plays in 2020 was Verizon acquiring Tracfone and Bluegrass Cellular.
In the authorized retailer space, there have also been some bold acquisitions, resulting in a handful of major players as the trend of market consolidation continues.
2. Telecom market convergence
The industry has also seen a major telecom market convergence. Traditional telecom lines separating wireless carriers — such as Verizon and AT&T — from wireline and cable operators — such as Dish, Comcast, and Charter — have continued to blur, to the point where they are no longer two separate markets. This convergence is set to create a major disruption to the retail model being used by existing wireless carriers and authorized retailers.
Marty Yaskowich, VP of Retail Customer Development at iQmetrix, said, “In the past, consumers have always gone to one place for their cellphone and another for their TV and internet services. But with wireline and cable companies moving into the wireless space, all of that is offered by one company. What’s more, they’ll come into your home and not only hook up your TV and activate your cellphone, but also hook up your smart fridge and your new car that has an advanced communication system.”
3. Big-box brands, OEMs, and online providers entering wireless
It’s not just wireline getting into the wireless game. There are also more and more big-box brands such as Staples and Costco introducing multi-carrier wireless stores-within-a-store. Yaskowich said, “If a customer is already in Costco, where they have to go for groceries anyways, they can go in and get their phone and get it activated. Why wouldn’t a customer want to get everything they need from one provider? Existing carriers and authorized retailers need to serve customers where those customers want to be served in today’s market, not using the 1996 business model. It’s time to think differently.”
Further to this, original equipment manufacturers (OEMs), such as Samsung, are also getting in on the action by making a play for the wireless revenue, creating even more competition in the telecom retail space. Yaskowich added, “Obviously they’re selling only their own products, but they’re trying to get into the wireless space, and they’re even more focused on the brand experience — the ‘wow’ experience for their customers. If you can go to an OEM store and get excited about their product — Apple did this better than anyone — you go for an educational experience, and that’s worth visiting a store for. It might be more about showrooming, but it works in this sector.”
If all that was not enough competition, in addition to established brands or retailers entering the market, there is also the emergence of completely new companies such as Mint Mobile and Dish’s new brand, Ting.
Stacy Hamer, Vice President of Client Experiences at iQmetrix, said, “These are online-only providers without a storefront. This means they’re cutting out all these other costs and are highly competitive on their prices. You would never have thought five years ago you’d buy so many clothes online, but now everybody does. Now phones are going the same way. These providers ship the phone to you in a single day and activation is way less complicated. Plus they run on the big carriers’ networks, so they typically have really good coverage.”
4. Global pandemic
Of course, it’s impossible to discuss retail in 2020 without mentioning the effects of the coronavirus pandemic. Luckily, telecom retail was deemed an essential service and for the most part, was able to operate in its natural state. In many aspects, the telecom industry led the way. Forbes published a video ranking the top companies that responded well to the pandemic, and three of the top five were carriers.
The main effect this pandemic had on telecom retail is an accelerated change in technology. Technology that may have been previously considered optional or a “nice to have” — such as buy online pick up in-store, curbside pickup, or contactless payments — are suddenly table stakes. Features that were already important, like home delivery and omnichannel fulfillment, became critical and will remain so.
Naturally, e-commerce exploded in 2020’s first quarter as consumers stayed home and ordered everything online. The sector saw a classic hockey-stick effect in terms of penetration in the US, with 10 years of growth occurring over the course of three months. Verizon, for example, saw a 20% increase in web traffic in one week due to the pandemic.
Hamer said, “The pandemic obviously caught everyone off guard, and traditionally telecom retailers haven’t had to pivot very quickly to new things. That luxury got ripped away and they pivoted rapidly in all areas of their business. There were massive changes to how they engaged staff in new selling processes, making sure staff felt safe, and then how they served customers. What was really cool was how quickly telecom retailers innovated in the early days before the technology caught up, with low-tech creative solutions enabling curbside pickup, social distancing in-store, rearranging store layouts, payment device workarounds, and so on.”
5. Physical stores and evolving products
The physical store model is changing. Black Friday as we knew it — crowds of shoppers waiting outside stores at dawn and fighting to grab the best deals — was proven all but dead in November 2020, as shoppers moved online and stores largely remained quiet. To compete with initiatives such as Amazon’s Prime Day, as well as provide a safe shopping experience when encouraging shoppers to pack stores is not advisable, many retailers spread their deals and promotions over the course of several weeks. While online sales over the 2020 Thanksgiving weekend broke new records, in-store purchases decreased.
And yet, for all that change, the reality is that most consumers still go into the store to complete the last mile of their purchase. Even with store closures and the pandemic, brick-and-mortar stores accounted for 63% of sales between January and June 2020, according to a study by J.D. Power.
“Service and education will always be needed,” said Yaskowich. “As these products and services get more and more complex, consumers will come to the stores for help. But the reason they are in-store for an hour shouldn’t be because they’re waiting around to be served and because the retailer’s system and processes are slow and cumbersome.”
The rollout of 5G will also disrupt traditional stores and the products they’re selling, added Hamer.
“By bringing a whole new set of products to market that telecom retailers are not traditionally comfortable with, and don’t yet understand what they will mean or bring to consumers. 3G and 4G didn’t radically change the technology, the hardware, or rate plans, but that bubble that retailers have been working in will burst. 5G will change products, rate plans, and services, as well as store operations in general. This will create both threats and opportunities.”
Want to read more about the state of the telecom retail industry? Our whitepaper gives you a deeper dive into the trends disrupting the market today, and where the sector is headed.