Whitepaper

The State of the Telecom Retail Industry

(And Where it's Going)

 

Learn MoreWhy iQmetrix

We all know retail is complicated. Ever-increasing customer expectations are shaping the business of retail, and ever-changing technology can be difficult to stay ahead of. But telecom retail is especially complicated.

Telecom always goes through rapid changes, but this year, the rate of change has been truly incredible—even unprecedented. The acceleration of 5G and continued industry competition have likely been a catalyst for some of the changes, especially in the blurring of lines between wireless and wireline players in the telecom retail space.

But there’s a lot more at play than that. As the market begins to converge, non-traditional providers are poised to “Uberize” telecom retail by disrupting existing models and threatening today’s biggest brands. Consumers, who already have high expectations of convenience and seamless service, will come to expect the ability to buy a phone and activate it anywhere—the grocery store, their own home, the street, a pop-up store. Telecom retail, and the customer experience it offers, is now being held up against all other segments of retail—particularly those in the tech space. If telecom retailers fail to keep up with the level of service being offered by such forward-thinking brands as Apple or Tesla, they risk falling behind and being overtaken by those who will.

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Below, we examine the current state of play, where telecom retail’s biggest challenges currently lie, how retailers must respond immediately, and where the industry is headed.

 


Contents

  1. Industry changes and threats
  2. Telecom’s five key challenges
  3. How telecom retailers must evolve today
  4. The future of telecom retail
Industry changes and threats

Looking back on 2020, there have been five major factors resulting in massive industry changes over the year that are disrupting the market and creating significant threats to existing wireless businesses.

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 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 more recent plays 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.

 

“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.

Marty Yaskowich, VP of Retail Customer Development at iQmetrix

 

3. Big-box brands, OEMs, and online providers

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.

 

These are online-only providers without a storefront. This means they’re cutting out all these other costs and are really 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.

Stacy Hamer, Vice President of Client Experiences at iQmetrix
 

4. Global pandemic

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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. Indeed, 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 curbside pickup or contactless payments—are suddenly table stakes. Features that were already important, like home delivery and omnichannel fulfillment, are now critical.

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.

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Verizon, for example, saw a 20% increase in web traffic in one week due to the pandemic.

 

 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.

Stacy Hamer, Vice President of Client Experiences at iQmetrix

 

5. Physical stores and evolving products

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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—is all but dead. 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 are spreading deals and promotions over the course of several weeks. This year, it is predicted that online Black Friday sales will exceed in-store transactions for the first time ever.

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, 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.

Stacy Hamer, Vice President of Client Experiences at iQmetrix

 

Telecom’s five key challenges

Partially—but not entirely—related to the five major changes outlined in the previous pages, telecom retailers today are facing five key pain points in their businesses.

1. New players expanding into wireless

Whether it’s wireline carriers or OEMs moving into wireless, or national brands standing up store-within-a-store operations, telcos are looking to capitalize on new revenue opportunities in wireless and figure out how they can jump into the market successfully. With telecom retail being so incredibly complex, it’s not a simple leap to make. The right technology choices will be critical for those providers in a successful move into the wireless space.

On the flip side of this is the significant threat these new entrants present to existing wireless players. Current operators must respond by meeting their customers where they wish to buy, bearing in mind that their new competitors can reach customers in their homes, at the grocery store, or at a branded kiosk. Existing wireless brands do retain some advantages, such as customer loyalty and force of habit. But these will not be enough in the long term if new competitors are offering much greater convenience, according to Yaskowich.

He said, “These companies—like Dish, Charter, Shaw, and Cox—are already in our homes. That’s a huge disruption to the current wireless retail model, which requires the customer to come into the store and wait around to be served. Carriers are now recognizing that it’s a better experience for their customer to buy a handset online and have it delivered to their home.”

2. Bridging the carrier and authorized retailer divide

Many telecom retailers struggle with the divide between the corporate and dealer channels. There are many complexities around such issues as:

  • bill payments
  • carrier pricing plans and changes
  • rate plans and terms
  • the time it takes to sell and activate a phone
  • reconciliation of commissions

…and many other factors.

This dynamic is unique in retail and there is a need to create a healthy business that strikes a balance between the authorized retailer having the autonomy to run their operations with the specific interdependencies between authorized retailer and carrier.

3. Creating a unified brand experience for the customer

Telecom-Industry-3-12Arguably the biggest challenge facing telecom retailers—whether wireless, wireline, carrier, or authorized retailer—is the need to deliver a unified customer experience in-store, online, and everywhere in between.

 

If you’re a customer and you go to a particular carrier brand’s store, you don’t know if you’ve walked into Joe Smith’s wireless store and they’re an authorized retailer for that brand, or it’s run by a larger retailer like Glentel, or if it’s a corporate-owned store. And all those different kinds of stores under the same brand will run differently, with different systems and processes and inventory. Maybe their return policies are different. Maybe they stock different accessories. But the customer doesn’t know that, and it creates a disjointed experience as the customer encounters the brand in different kinds of stores.

Stacy Hamer, Vice President of Client Experiences at iQmetrix

 

4. Radically improving today’s poor in-store experience

Whether it’s a long line causing retailers to miss out on sales and the customer to be disappointed with the brand, or a legacy system or process meaning an activation or transaction takes too long, today’s telecom customers suffer among the worst in-store experiences in retail.

Retailers should be creating the “wow” experience that other sectors offer, argued Yaskowich. “If the customer is in a store for an hour, they should be there for that long because they’re having a great educational experience, like the hour you might spend in an Apple store learning from an expert, or in a boutique wine store talking to the sommelier. Telecom retail spaces need to evolve to offer the convenience of quick service—such as using bill payment or endless aisle kiosks—with the exceptional customer experience expected of bigger-ticket purchases.”

5. The immediate need of reducing contact points in-store

The coronavirus pandemic has accelerated a number of technological advances—some of which were already being developed, while others are a direct response to the virus. The need to reduce contact points has been a key challenge arising from the health crisis.

Hamer said, “Telecom retailers need to do this, because their customers now expect this. Retailers don’t have the luxury of waiting to implement contactless payments anymore, as it’s demanded. And it shows you respect your customer. And we know customers who have a good experience in the store are willing to pay more and buy more.”

How telecom retailers must evolve today

Consumer behavior is changing rapidly, and the pandemic has accelerated the evolution in buying habits. Across retail sectors, customers are shopping less but when they do go to a store, they have an intent to purchase. Those customers are increasingly starting their journey online, and their store visit is often the last mile in their purchasing journey.

In response to changing behavior and expectations, it is vital that telecom retailers integrate omnichannel solutions that seamlessly connect their customers’ in-store experiences with digital retail channels.

Implement online availability, BOPIS, and ROPIS

The ability to view products online and make online purchases has become the norm for today’s consumer. For the telecom retailer, such e-commerce features can be implemented all at once or phased in.

 

1.  Making inventory available online is the first and most crucial action. For carriers, this is an opportunity to take the first step by showing inventory in carrier stores online. What’s more, the work put into these efforts is reusable as carriers grow that experience in the future.


2.  Giving customers the ability to reserve online, pick up in-store (ROPIS) is the second step. ROPIS allows customers to reserve a device online so they know it will be at the store when they get there. This solves the problem of customers knowing the phone they want, but needing consultation on their choice of rate plan, for example. 


3.  Allowing customers to buy online, pick up in-store (BOPIS) is that last mile that makes an online channel truly omnichannel—it facilities the entire purchase remotely, and lets that customer choose when they want to head into the store.

 

Screen Shot 2020-11-27 at 2.21.39 AMThere’s no doubt that implementing these tools is now essential for today’s telecom retailer. iQmetrix has seen a 400% increase in sales of its BOPIS product year-over-year, resulting in $192 million in BOPIS sales powered by iQmetrix. And this is a trend that will continue, even in a post-COVID reality. In 2020, customers are using this functionality out of necessity, but they will continue to use it out of convenience.

Move to contactless (or contact-reduced) retail

Once inventory is visible and customers can buy or reserve online, telecom retailers must then focus on improving the in-store experience. Contact points must be reduced, and a safe, efficient, convenient experience created for both customers and sales associates.

1.  Offering curbside pickup after the customer has bought or reserved online is the next step. This service is still often seen as challenging, from the complications of payment by a customer who has not yet paid for the product, to staff limitations making it difficult to serve customers outside, to logistical and parking issues. However, it is an important offering for certain situations, especially in fulfilling BOPIS orders.

2.  Consumers also require convenient and safe ways to pay, such as contactless payment. Retailers offering curbside pickup also need to be able to ensure that safety and convenience and a great way to do that is to take payment outside the store. A good contactless payment solution will allow customers to receive a link to pay on their mobile device and complete their purchase from anywhere.

3.  Queue management solutions are also helping customers limit human interaction and eliminate the frustration of a long line. A virtual queuing system captures the customer’s details at the door and allows them to spend their wait time productively. In turn, this feature boosts revenues by reducing walkouts and lost sales due to long lines. A 2019 case study by 451 Research estimated that more than $134 billion in retail revenue was lost every year as a result of customers leaving because of a long line. If a customer’s details are captured, even if they cannot wait, some of that $134 billion can be recovered by following up.

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The future of telecom retail

Offering a seamless, customer-centric, omnichannel experience is what telecom retailers need to be doing today to compete effectively and guard against the many threats to their revenue lines. But the future of telecom retail takes all this to the next level.

The future lies in the ability of telcos to enable customers to buy anywhere (and return anywhere), regardless of what brick-and-mortar or the front-of-house for retail may look like, as consumer expectations evolve and new channels emerge.

This focus on the evolving customer experience, with the concept of buy anywhere as the ultimate goal, is based on what iQmetrix calls the retail hierarchy of needs.

The Retail Hierarchy of Needs

Starting at the bottom of the pyramid, when a retailer doesn’t have a solid base of operational efficiency they’re unable to focus on anything other than fulfilling foundational retail needs, such as managing inventory, taking payments, allocating commissions, employee staffing, and managing all the data that goes along with it. This is the reality of the day-to-day for many telecom businesses. But fulfilling those basic needs is not enough, and indeed is only the start of creating an exceptional experience. 

Once those foundational needs are met, the retailer can move on to enhancing and improving the customer experience with omnichannel, as described in the previous section. Only once a true omnichannel system is achieved can the retailer elevate their business to the ultimate goal of buy anywhere.

 

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Buy anywhere

What does buy anywhere look like? The limit is our own imagination, but here are some examples:

  • buying from a mobile sales force
  • pop-up retail stores in the street and at events and venues
  • buying via IoT-connected devices
  • online and in-store working seamlessly together

Today, online and in-store working together means enabling a customer journey where a customer can begin their device transaction online at home and complete their transaction in their local store without having to queue in a crowded space. 

But tomorrow, this may mean telecom retailers shifting to using stores as fulfillment centers, and adding a mobile sales force with branded vans that bring the store experience to the customer’s doorstep, or offering flexibility with pop-up locations in a range of locations.

Adapting and evolving

In an article on adapting to the next normal in retail, McKinsey & Associates stated: “Retailers need to raise their metabolic rate—that is, the speed at which they process information and develop new offerings. The speed at which some retailers have been able to stand up new omnichannel models (for example, launching a new delivery business in three weeks) shows what a truly agile operating model can unleash.”

It’s even possible that the rollout of 5G will reduce the consumer’s dependency on phones entirely. Marty Yaskowich said, “5G can and likely will improve the connectivity of other types of devices in the Internet of Things ecosphere, which will put pressure on our current dependence on our mobile phone. When your fridge or your car is as internet-enabled and equipped as your phone, does your phone take less meaning in your life? 5G takes connectivity to a whole new level that is going to extend well beyond the traditional connected phone and computer, there is the potential it will start cutting into wireless revenues.”



The year 2020 has proven that the future is always unknown, but there are some things that we can safely predict. One of those is that successful telecom retailers of the future will need to meet their customers wherever they are, and however they wish to purchase products, with a seamless brand experience throughout their journey.Telecom-Industry-2-11

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About iQmetrix

iQmetrix’s intelligent retail management software is designed to power the telecom industry. Our solutions are built around enabling telecom retailers to deliver a buy-anywhere strategy through multi-channel inventory management and digital retail solutions; make data-driven decisions using powerful reporting; and unify storefronts and digital channels for a consistent customer experience, in-store, online, and anywhere else. For more than 20 years, we’ve been passionate about helping the leading brands in telecom grow by providing excellent software, services, and industry expertise that enables them to adapt and thrive. Currently powering over 20,000 retail locations, iQmetrix is a privately held software as a service (SaaS) company with offices in Canada and the U.S.