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How telecom retail can navigate its evolution to meet customer needs

11 minute read 17 Nov 2023

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Telecommunications

The world of telecommunications is rapidly evolving, and nowhere is this more evident than in the realm of retail.

In brief

Ultimately, telecom retailers’ success will hinge on their ability to stay ahead of the curve and adapt to the changing needs and expectations of customers.
New technologies and a robust omnichannel strategy can help telecom providers create a retail experience that is both engaging and convenient for customers.
If executed smoothly, this retail experience can drive long-term customer loyalty and success.

As the evolution of telecommunications retail unfolds rapidly, the need for telecom retailers to evolve is growing more urgent. New technologies are emerging and consumer preferences are shifting, posing considerations that telecom retailers must address if they want to stay ahead of the curve.

Valued at US$1,805.61 billion in 2022, the global telecom services market is expected to expand at a compound annual growth rate (CAGR) of 6.5% from 2023 to 2030.¹ Much of this growth will depend on telecom retailers’ ability to address the swiftly changing dynamics in the market.

Source: “U.S. Telecom Services Market,” Telecom Services Market Size & Growth Analysis Report, 2030, Grand View Research, 2021.

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The telecommunications retail industry faces distinct challenges in both lagging and emerging markets. In lagging markets, the industry struggles with unreliable networks and limited access to technology, exacerbated by geopolitical tensions and hyperinflation. These conditions make home deliveries difficult, and customers often rely on physical retailers for basic products. Meanwhile, in emerging markets, logistical issues continue to impede the full implementation of omnichannel experiences. There has been progress, but customers still prefer visiting physical stores, where customer support plays a vital role in connecting experiences and helping customers complete purchases.

In light of these challenges, we will focus on the fast-paced developments in advanced markets. These markets are poised to set the standard for the future of telecom retail, with the expectation that lagging and emerging markets will eventually catch up. Advanced markets enjoy robust government support and significant investments in technology, which have resulted in accelerated innovation in recent years.

In the future, achieving success won’t just hinge on adopting the latest tech; it’s about crafting a customer experience that seamlessly connects the digital and physical worlds, tailored to each individual.

Patricia Camden

Managing Director, EY Americas Loyalty Leader

Close up shot of beautiful woman shopping. She standing in mobile and tablet shop and choosing next model for her.

1

Chapter 1

Observable trends driving telecommunication retail’s evolution

From evolving store formats to shifting demographics, major change is shaping the industry’s future.

Various trends are accelerating the necessary evolution of the telecom retail industry, and they all focus on the same thing: the customer. A telecom retailer’s future will depend in part on its ability to transform the customer experience quickly enough. The following observable trends are driving this need.

Online channels are preferred, but physical stores are still required

A 2022 survey² found that online purchases are the preferred route for customers because using that channel is easier, but some consumers still have doubt and anxiety while purchasing devices online without human interaction.

Source: “What channel(s) would you prefer to use while making a purchase from a communications service provider?,” Consumer Sentiment on Communications, Salesforce, 2022.

Shoppers are using multiple channels to make purchases

One study reports that 73% of shoppers rely on multiple channels during their purchasing journey.³ For instance, a typical customer may engage with a brand through several touch points, such as conducting a web search, browsing the brand’s website, making a phone inquiry or turning to social media channels. The journey may culminate in a visit to the physical store or an online purchase.

These findings underscore the crucial need for today’s markets to invest in developing a seamless omnichannel experience. By optimizing their omnichannel strategy, companies can create an interconnected journey for customers, boosting trust and brand loyalty.

Source: Consumer Sentiment on Communications, Salesforce, 2022.

Nontraditional formats are giving the in-store customer experience a new look

The pandemic brought about a dramatic shift in consumer behavior, with a significant decline in traditional in-person store visits observed. According to a 2021 study on telecom retail opportunities, these visits have decreased by 20% post-pandemic, while alternative purchasing methods such as “buy online, pick up in store” (BOPIS) have seen a sharp uptick.⁴ BOPIS has been around for several years, and as customers become more and more comfortable with technology, we continue to see them generally limiting the amount of time they spend in stores.

Compelling survey data published by Doddle supports this trend, revealing that a staggering 85% of shoppers surveyed made additional in-store purchases while picking up their online orders.⁵ These findings highlight the immense potential for retailers to create a frictionless omnichannel experience that seamlessly integrates physical and online shopping. By offering BOPIS and similar services, retailers can engage customers, build loyalty and drive revenue growth.

The consumer of the future is here

Gen Z, the first generation of true digital natives, will have global spending power of US$33 trillion by 2026 and is poised to surpass millennials in terms of income by 2031, according to Bank of America.⁶ Gen Z consumers grew up with technology and expect personalized, connected experiences across the buying journey, from research to advocacy. Despite being digital natives, Gen Z still values shopping in stores, with a study by Euclid Analytics finding that 81% of Gen Z customers prefer to shop in store for items such as electronics.⁷ To attract Gen Z into the retail environment, retailers should consider designing experiences that reflect this important demographic’s values and priorities, such as community, sustainability, affordability and excellent personalized customer service.

Source: Physical phone stores are still the primary driver of telecom brand perception and customer experience, NCR Corporation, 2021.

Smartphones for sale in the store.

2

Chapter 2

How the nature of in-person retail store visits is changing

The overall in-store telecom customer experience is about to look much different.

In these advanced markets, customers still frequent physical stores (albeit with different formats), but the reasons for their visits have evolved — and will continue to evolve. Retailers in these markets must adapt to this evolution to safeguard their growth in the future. Below are three in-store experiences that are likely to evolve further.

The current state: According to a J.D. Power report from 2022, about 36% of wireless customers in the United States preferred to visit a physical retail store for information or assistance with their wireless service.⁸ This includes seeking advice on phone usage and plan types, as well as other issues, such as troubleshooting technical problems or getting help with billing. Many customers prefer face-to-face conversations for a better experience and easier process.

The evolved state: As technology advances, we can expect fewer people to visit stores for technical support.

Chatbots powered by artificial intelligence (AI) and self-service options using generative AI let customers resolve technical issues independently (for example, through interactive FAQs).

And augmented reality (AR) and virtual reality (VR) enhance the customer experience by enabling virtual product exploration and simulated interactions with customer service representatives. For instance, AR allows customers to visualize products in their homes, and VR lets them enter a virtual telecom store.
The current state: Telecom retail stores have traditionally been an integral part of the consumer’s purchasing journey. These stores provide a physical touch point for consumers to interact with devices, explore new products and services, and receive expert advice. However, with the rise of e-commerce, traditional retail stores are now evolving to include other formats, like BOPIS. Despite this evolution, people still prefer to physically visit stores as part of their purchase journey, along with the online channels of partner brands.

The evolved state: In the future, telecom retail may leverage evolving technologies like AR, VR and the metaverse to create immersive shopping experiences.

This could allow customers to explore virtual stores, interact with products and receive personalized recommendations. Additionally, the use of generative AI may allow for more accurate and efficient product searches.

Physical stores may still exist, but they are likely to be more experiential. This requires companies to invest in new technologies and innovative store designs, as well as hire staff with the skills and expertise needed to create memorable shopping experiences.
The current state: Number porting is a critical component in new activation that can be initiated online, but many consumers prefer to visit retail stores because the process often requires complex documentation and forms. According to the United States Government Accountability Office, over half of the customers who attempted to port their phone numbers independently encountered problems such as delays or loss of service.⁹

In-person visits allow customers to ask questions, discuss concerns and receive hands-on assistance from store associates. In-store trade-ins are also popular for device upgrades. Through an in-store visit, a customer can spend less on a new device and receive guidance from store associates when choosing the best new device or plan for their needs.

The evolved state: Online trade-ins and activations have become more common, with more telecommunications companies offering them. Reflecting a trend that the pandemic accelerated, these options have been convenient for customers who prefer to shop from home or who may not have easy access to physical stores.

In addition, future number porting in telecom is promising, with blockchain ensuring secure and transparent transfers. Generative AI chatbots guide customers, reducing the need for human intervention. And AR and VR tech is revolutionizing the process, making it more accessible by simplifying steps and enabling customers to visualize telecom products.

Close up shot of beautiful woman shopping. She standing in mobile and tablet shop and choosing next model for her. Selective focus on hand.

3

Chapter 3

Crucial areas of focus for telecommunications retailers

To future-proof retail stores, telecom companies must prioritize elements like data and technology.

To stay competitive in the evolving retail landscape, telecom providers will need to focus on key areas and make strategic investments so they can deliver a seamless and differentiated customer experience. Here are some areas companies can prioritize to adapt and thrive in the changing retail landscape.

Seamless integration between physical and digital channels – With the continued growth of online shopping, telecommunications retail stores may become more focused on fully integrating in-person experiences with digital channels. This could involve the use of AR and other immersive technologies to create engaging and interactive experiences that blend the physical and digital worlds.
Personalized, data-driven experiences – Telecommunications retail stores may increasingly rely on customer data to provide personalized experiences tailored to individual needs and preferences. However, they must do so while following regulations and laws.
Automation and self-service – Telecommunications retail stores may become more automated, with self-service kiosks and digital assistants handling routine tasks, such as providing product information and facilitating purchasing. This could free up staff to focus on higher-value interactions with customers, such as personalized consultations or technical support. Additionally, predictive maintenance tools and capabilities, such as alerting customers of data usage information or upcoming upgrade opportunities, can proactively get customers in stores and help shops anticipate the demand for staff.
Transforming retail spaces – Telecom retailers will need to adapt to the changing retail landscape by offering more engaging and interactive in-store experiences, providing additional services and support, and leveraging digital channels to enhance the customer experience. They may also need to consider reimagining store types, including full-service stores, experiential showrooms, express stores and kiosks.
AR and VR – Telecommunications retailers can leverage AR and VR technologies to offer immersive and engaging in-store experiences, such as virtual product demonstrations or interactive games. This can help them attract and retain customers while also providing a differentiated experience that is difficult to replicate online.

¹ “Telecom Services Market Size & Growth Analysis Report, 2030,” Grand View Research website, 2021, https://www.grandviewresearch.com/industry-analysis/global-telecom-services-market, accessed September 2023.
² “Consumer Sentiment Snapshot: Communications Services,” Salesforce website, https://public.tableau.com/app/profile/salesforcecommercecloud/viz/Comms-Wave2-ConsumerSentimentSurvey/CommsViz, accessed September 2023.

³ Sopadjieva, Emma, Dholakia, Utpal M., et al., “A Study of 46,000 Shoppers Shows That Omnichannel Retailing Works,” Harvard Business Review website, https://hbr.org/2017/01/a-study-of-46000-shoppers-shows-that-omnichannel-retailing-works, accessed September 2023.

⁴ Burr, Henry, “Physical phone stores are still the primary driver of telecom brand perception and customer experience,” NCR Corporation website, https://www.ncr.com/blogs/telecom-retail-shift-in-preferences, accessed September 2023.

⁵ O’Shea, Dan, “Most BOPIS shoppers make additional purchases in store,” Retail Dive website, 2019, https://www.retaildive.com/news/most-bopis-shoppers-make-additional-purchases-in-store/549068/, accessed September 2023.

⁶ Hoffower, Hillary, “Gen Z is set to take over the economy in a decade, despite potentially losing $10 trillion in earnings because of the pandemic,” Business Insider India website, https://www.businessinsider.in/policy/economy/news/gen-z-is-set-to-take-over-the-economy-in-a-decade-despite-potentially-losing-10-trillion-in-earnings-because-of-the-pandemic/articleshow/79253352.cms, accessed September 2023.

⁷ Anyanwu, Obi, “Survey shows almost all of Gen Z shops in-store,” Fashion Network website, https://us.fashionnetwork.com/news/Survey-shows-almost-all-of-gen-z-shops-in-store,780025.html#.WMB5QfkrKUk, accessed September 2023.

⁸ “TMT Consumer Insights,” J.D. Power website, https://www.jdpower.com/business/technology-media-and-telecom, accessed September 2023.

⁹ “Wireless Local Number Portability (WLNP),” Federal Communications Commission website, https://www.fcc.gov/general/wireless-local-number-portability-wlnp#rollout, accessed September 2023.

Summary

Technology will be a major influence on the future of telecommunications retail as telecom companies integrate omnichannel capabilities, AI and self-service tools into their retail stores. Additionally, experiential and interactive stores will become increasingly important as telcos look to create engaging, memorable in-store customer experiences. The shift toward online capabilities and digital transactions will continue, fueled by growing consumer comfort with online transactions and supported by the increasing availability of online trade-in tools and platforms. Nevertheless, telecom companies that adapt and proactively evolve their offerings are likely to differentiate themselves and retain their customers’ loyalty in an increasingly competitive landscape.

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