Is retail for telco dead?
August 16, 2021 - David McGlew
Following the recent announcement from Three Ireland investing €27 million in revamping its stores to sell ‘Smart Lifestyle’ products. This blog discusses the future of retail for telco.
If you’re to look at recent developments in the UK market you might think it’s heading that way. Carphone warehouse used to be one of the UK’s biggest independent retailers, selling phones and tariff plans for several leading Operators in the market. In March 2020 they announced they were closing 531 stores in the UK and a year later in March 2021 closed 85 stores in Ireland, citing a change in buyer behaviour, a migration to SIM-only tariffs and consumers breaking the link between their phone ownership and their tariff plan. This is old news you might say and signposts a trend across multiple markets Globally. Well, an announcement this week from Three Ireland bucks this trend and had got me thinking about the role of retail as a sales or service channel for Telcos.
Three Ireland is investing €27 million in revamping its stores around the country as the company shifts its retail focus to include ‘Smart lifestyle’ products. They will continue to sell handsets in its stores, but will now add to their offering a series of ‘Smart Lifestyle’ products like Smart hubs, Mesh Wi-Fi, Robot labour saving devices (Robot vacuum cleaner), audio and visual as well as security for the consumer homes. Stores will initially be divided into four themes – Home, Work, Music and Play. This initiative is based on research Three Ireland carried, including a consumer panel of 100 participants that gave feedback on product.
In Three’s recent press release, they cite resent research* from March 2021, that 60% of respondents agree they ‘prefer shopping in person to shopping online’. This is despite the huge shift online we’ve seen since covid 19 first hit in March 2020. At the heart of this is access to expertise which the retail experience can offer. When it comes to these new range of ‘Smart Lifestyle’ products it seems Three’s insight, that consumers want to be supported in their buying experience with in-store expertise, is spot on. If these smart products are to be adopted by the mainstream, I think that consumers will prefer to rely on the retail experience to help them with their buying decisions. Which leads me to the real kernel of this piece: that telco’s need to improve and widen the services they are offering to their customers.
Taking the improvements first, they improvements fall into two categories: Quality of Service (QoS) and Personalisation. With the advent of 5G and harnessing the capability of AI & ML Telco’s can now deliver a combination of improved quality as needed and personalised services. You might think with the mention of AI & ML we have moved firmly into the digital-only online world with no relevance to the bricks and mortar world of retail, not so. I believe that the often-cited strategy of ‘omni channel’ (including bricks & mortar) comes to the fore here and the digital front ends with embedded AI & ML across all channels are key enablers of this improved customer experience, which should see consumers move seamlessly between online and physical retail channels.
In term of widening their offering, partnership with 3rd parties will play an important part in identifying new revenue streams or categories, as with the Three Ireland’s ‘Smart Lifestyle’ range offering categories in addition to handsets and mobile broadband. Telco’s have been slow to create and enable these partnerships, historically it’s been expensive and complex to expose their network or IT systems to 3rd parties. From an ROI perspective it has not been particularly attractive unless there is real scale possible. 5G make this easier for Telcos, with new network functions, such as NEF (Network Exposure function) and cloud native monetisation solutions built as micro services. With this capability it’s much easier and cost-effective to open up their network to 3rd parties. On the vendor side, as we go about the business of enabling our Telco customers to build the capability to engage in these partnerships and create new revenue streams, it exciting to see the likes of Three Ireland buck the trend in Telco Retail and offer a new category of product and service. We’ll be watching with interest on how the market evolves. Digital enablement will be key to new service offerings but a mix of bricks & mortar as well as digital will be part of this more optimal range of offerings for quite some time for many service providers it seems.
* Research carried out by Foresight Factory March 2021