September 2010
As commerce is increasingly conducted virtually, through a computer or mobile device, what unique value can a retail store continue to provide? Executives at many consumer-oriented businesses are grappling with the changing nature of the shopping experience and looking to structure the physical retail channel in a way that can improve customer loyalty and competitive differentiation and, ultimately, support profitable growth.
To shed light on the role that the retail store plays in driving high performance in the communications industry, Accenture has conducted comprehensive research focused on both consumers and service providers. (See “The Value, Role and Performance of the Physical Retail Channel for Communications Service Companies,” Accenture 2010.)
On the positive side, our global study—which surveyed more than 3,000 consumers of communications products and services and 50 senior executives at the world’s largest service providers—confirmed that consumers still value a physical store as a place to learn more about the growing array of mobile devices and the increasingly complex range of communications services available. On the negative side, too few providers are offering the kind of unique, engaging and knowledge-rich store experiences that consumers want.
This is a challenge, but also a big opportunity for companies to change their game. Our research has confirmed that the retail channel is an important competitive battlefield. Retail locations can actually be growth accelerators—channels that consumers value and that can help providers increase revenue and market share.
The value of stores
Consumers and providers agree on the value of the physical retail channel. Nearly nine in 10 providers said a strong physical retail channel is important to their growth strategy today, and about the same proportion expect retail stores to remain important in two years.
Three out of four consumers said they want to visit a retail store when purchasing communications products or services. About two-thirds said the store is their preferred channel for making purchases, and more than three-fourths said the quality of a communications provider’s store experience is a factor in their decision to do business with that company.
Support for physical stores is more than a fleeting thing. More than three-fourths of consumers said that physical retail stores will be as important as or more important than providers’ online stores over the next few years. Companies intend to meet that need: More than three-quarters of providers said they plan to increase their total number of retail storefronts.
Why are stores important? From the consumer’s perspective, people want to touch and hold various devices, try them out and ask sales staff about particular features. From the provider’s perspective, the store is important because consumers shopping there are generally further along in the consideration process. Retailers have an opportunity to “close the deal” and even up-sell to a larger portfolio of services—if, that is, the sales staff have the right skills and can provide a distinctive value. According to Accenture research, that’s a big if.
Creating a distinctive retail experience
It’s hard being a retailer these days, in any industry. A retail store must provide something more distinctive than just the product itself. Because information about a product (and what it costs) is so easily available online, consumers visiting a retail store are now highly knowledgeable—sometimes more than the sales staff.
The consumers who participated in our study want the ability to learn more about providers’ products and services in the store, especially as the complexity of those products and services increases. Fewer than 20 percent of consumers believed that their providers’ stores are performing extremely well in product availability, in having knowledgeable and available store staff with positive attitudes and in delivering speedy service.
Providers themselves acknowledge a number of shortcomings in areas such as integrating stores with other customer channels and creating in-store products and offerings that can be more readily tailored to consumer needs. Companies also know they lack the analytical tools and performance metrics that can help deliver a more compelling customer experience that can improve sales.
What the leaders are getting right
Analysis of the survey data identified a group of leading companies with the most mature retail capabilities. These providers are more likely than their peers to describe their stores as effective or very effective in driving sales and incremental profit, supporting the company’s brand, providing a differentiated customer experience, and delivering education and technical assistance to customers.
Accenture believes the manner in which these leaders deliver a compelling retail experience will increasingly be a factor in achieving high performance in the communications industry. The new retail focus will involve integrating all facets of operations, including the layout of the store itself, and identifying the right depth and breadth of a compelling and relevant product assortment.
Because product availability and knowledgeable staff are seen by consumers as the most important attributes of stores, providers need to assess their supply chain and HR/training capabilities. They must then identify ways to improve those areas to differentiate themselves from competitors.
Moving forward
Based on our research findings, we believe providers should consider a number of key actions as they seek to strengthen their physical retail channel.
Set the strategy
Given that stores continue to be important to consumers of communications products and services, providers must develop and regularly refine a retail strategy that supports their overall business strategy. Although this strategy should incorporate a focus on building strong company-owned stores, it also should carefully balance the use and mix of other physical retail channels to maximize convenience for customers.
Bear in mind, however, that in our survey, the critical consumer segment of adults between the ages of 18 and 34 expressed a strong preference for company-branded retail outlets because of the impression that such stores can do more than just sell the device. Consumers are looking for deeper expertise about products and services than they believe they can get at the typical big-box retailer.
Integrate the channels
Although it is clear that physical retail stores are important, there also is strong consumer support for an effective multichannel experience—something that companies have indicated they are largely ineffective at providing today. Thus, building and maintaining the technologies and processes that provide cohesive integration across physical stores, the website, call centers and mobile channels will be a critical component to a communications provider’s success.
Understand your customer segments
Customer preferences vary considerably across geographies and age groups, so communications providers must tailor their retail offerings to appeal to key customer segments, both consumers and enterprise customers. Creating effective retail experiences requires a strong analytics capability—something most providers in our survey said they lack—and the ability to act on the insights generated by those analytics.
Engage the customer
Finally, companies must deliver an engaging retail experience that consistently fulfills their customers’ needs. Providers must free up their store employees so they can dedicate more time to selling, and companies must foster an inviting environment to deliver technical and educational assistance to customers.
The future of stores
Many companies are concerned about the viability of the physical retail channel today because of the belief that online purchases are cannibalizing the sales of physical stores. Our research shows that such a concern is unfounded. A real interdependency now exists among all channels and forms of customer interaction, including face-to-face, online and phone communications.
What is true, however, is that the retail experience must now offer a distinctive value, complementary to other channels. Most companies have a long way to go in understanding the needs of their customers, and in delivering a compelling set of distinctive capabilities that takes advantage of the unique power of a face-to-face interaction. That’s both the challenge and the opportunity for communications providers today.
About the author
John R. Liesching is executive director of the retail group, Accenture Communications, Media and Technology.*
*formerly Communications & High Tech
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