Consider these numbers. Vodafone has 1.56 million sq ft under retail, with 9,880 exclusive stores. The country’s largest private telecom operator Airtel has 2,350 branded stores covering approximately 1.41 million sq ft.
Idea Cellular has 800,000 sq ft of retail space in the market, putting together 7,200 stores in 5,200 towns. Telenor, which currently operates in six circles, has 2,000 small format stores each measuring 130 to 150 sq ft, covering approximately 280,000 sq ft of retail space.
Clearly, the 2.0 version of telecom retail branding is changing the brick and mortar retail landscape with large footprints and a thrust on multichannel offerings.
As the adage goes, ‘retail is detail’. For Indian telecom players then, it is twice the detail. In a market dominated by prepaid consumers, with wireless tele-density around 78%, 300 million mobile internet users by 2017 (IAMAI) and an internet penetration of only 19%, a large retail footprint is a necessity to reinforce their brand and influence purchase decisions. “For a product like telecom, which is vastly distributed, there are two things you need to achieve: first, distribution and second, customer connect. A physical store plays a big role in strengthening customer connect,” says Rohit Bhatiani, director, Deloitte India.
The migration of customers from feature phones to smartphones presents a huge opportunity for brand stores.
“Every customer walk-in provides brands an opportunity to push their products and create a connect,” says Bhatiani. Branded stores can act as a platform to display new products, test them in-store, check the internet speed, facilitate downloads/apps etc. These aspects of the in-store experience are a must for India’s fast growing telecom space.
A question of reach
For telecom players, having a large retail footprint is more than a branding exercise. The store presents an opportunity to cross-sell, upsell, educate customers about new plans, new devices etc. It is no longer just a push channel. According to McKinsey’s Customer Lifecycle Management survey, in-store education in the telecom space can double or even treble the likelihood of data product usage.
“The growing popularity of smartphones has led to a rise in demand for data. We see tremendous potential in this area and have been handholding customers on the ease and benefits of mobile internet usage,” says Kavita Nair, national head, retail & digital, Vodafone India. “ Branded retail stores form the crux of our operations to reach every nook and corner of the country and to cater to the rising demand for mobile internet.”
Vodafone India has over 9,880 branded retail stores (September, 2015) in the country. It caters to over 188 million customers and attracts over 115 million walk-ins annually. It has a three-tier retail format, which includes Vodafone stores (683); Vodafone mini stores (3,414) and rural mini stores (5,783). “Vodafone stores are a one-stop shop for our customers to address all their needs — from new connections to queries, bill payment, recharges, etc.,” says Nair.
For Idea Cellular, the key KPI of a branded store is customer retention. Each Idea store, irrespective of its size or who is operating it (company-owned or franchise), has access to CRM. Idea currently has 800,000 sq ft of retail space in the market. “Being customer centric is critical for us. We see walk-ins of more than seven million customers every month. It is like a semi-retail company,” says Navanit Narayan, chief service delivery officer, Idea Cellular.
“Our customers who are handled by the stores have a lower churn, compared to those who do not have any access to Idea stores.”
Currently, there are 7,200 Idea stores in 5,200 towns. It also includes 60 large format stores, which are on high streets and are leveraged to display new technologies, apart from being an escalation point for customers. Besides Idea services, all these stores also sell handsets, dongles and other bundled offers. Idea has both company-owned and franchisee stores. The large format stores are owned and run by the company to control customer experience.
Small format stores in rural areas and semi-urban areas have been established primarily to cater to the prepaid market and rural consumers. Idea plans to increase the number of large format stores from 60 to 150 in the next four months. “The total number of stores will increase from 7,200 stores to 8,800 stores across 7,000 towns,” says Narayan.
Now take the case of Airtel, which has more than 350 company-owned and 2,000 franchisee retail stores. The average size of an Airtel store is 600 sq ft, with a minimum staff strength of seven. For Airtel, the rationale behind having brand stores is to provide the best service experience to its customers.
According to a company spokesperson, a company-owned-company-operated store aims at quality service engagement. Airtel stores are one-stop shops for all service related requirements. They also include dongle and broadband connections services, quick attention to service requests etc. Airtel currently has more than 339 million customers across India with a network presence in 5,126 census and 464,185 non-census towns and villages.
Telenor, which operates in six circles, has 2,000 small format stores, each measuring 130 to 150 sq ft. These are ‘two people’ stores because the aim is to provide as many touch points as possible. “Telecom is a mass market product. The six circles Telenor operates in comprise both urban and rural market segments,” says Upanga Dutta, CMO, Telenor India. “In addition to selling from multibrand outlets, which are the biggest channels for telecom as a category, as they resemble FMCG sales, we also give a lot of emphasis to our own brand retail.”
The reason? Enhanced customer experience and service. It is based on sales and service as a model. Telenor has also built these stores as customer education hubs, called Grahak Shiksha Kendra, in rural and semi-urban areas. This enables consumers to understand what the most fitting product is, according to their usage.
Telenor operates through a franchise model. In the last few years, it has opened more than 850 stores. Around 500 were added in 2015 alone. “Profitability is better when you have compact stores. We don’t differentiate between urban and rural areas because we want to give a uniform experience,” says Dutta. Telenor has more than 48 million subscribers.
As consumers are moving to smartphones, they look for internet as one more service. “We have about 24% of consumers on the internet. Stores play an important role in educating customers,” says Dutta.
In rural India, face to face interaction plays an important role. There is a lot of handholding required when it comes to new recharges and bill payments, top-ups, data packages etc. For instance, Telenor has a three-pronged strategy to cater to rural consumers. First, product discovery, which includes understanding the needs of rural consumers, and helping them buy the right product as per their requirement. Second, service adoption to internet as a new category, and third, personalised customer service.
The telecom operator also recently launched a mass market life insurance for its subscribers with 100 times the value of a monthly recharge and upto a maximum of R 50,000.
Vodafone’s retail footprint in this regard covers over 1,500 towns and over 5,000 villages. In addition to its 250 global design stores, which it has in top cities, it has a physical presence in small towns with 500-plus population, through Vodafone Laal Dukaan.
“We have developed a robust network of more than 5,000 rural ministores,” says Nair of Vodafone India. These stores work as relationship hubs and Vodafone makes sure that the person running them has a good connect with the people — for example, someone from the local panchayat. This model helps provide employment opportunities to the local residents. Each of these stores has a franchise owner and a customer care executive.
Engage the multichannel shopper
Given that consumers are no longer using any one channel to interact with brands, brands also need to master various customer touchpoints. Telecom players should leverage their location and provide an array of services. For instance, tie-ups with e-commerce players for click- and-collect; investment in large digital screens where customers can experience products and place orders; keeping more accessories related to mobile phones, etc. “Stores shouldn’t be only for paying bills or adding connections because these services can also be availed online,” says Rajat Wahi, partner & head, consumer markets, KPMG India.
It is worth mentioning though that network retail stores can do much more than being just a point-of-sale or a CRM platform. They have the potential to become a technology retail platform for the latest offerings by becoming experience zones.
“The brick and mortar store in the telecom context is evolving. Eventually it will become an outlet for educating customers about new services and more advance products discovery,” concludes Wahi of KPMG India.
Postcard from overseas
AT&T: Experience technology
US-based wireless carrier AT&T launched a new store design with its first flagship store in Michigan Avenue, Chicago, in 2012.
This experiential flagship store provides unique customer support instead of being purely sales driven and it has been designed in such a way to allow customers to better explore, learn and play with AT&T’s products and services.
The store has done this through an open floor plan, which consists of experience pavilions and community tables. The traditional sales stations have now been removed and consultants are being equipped with tablets to help customers anywhere in the store.
For one-on-one time with consultants, there is also a solutions centre. AT&T operates more than 5,000 points of retail distribution with over 2,000 being company-owned. The new design is now being rolled out in other stores as well.
Singtel: Multimedia shopping
Singtel has been creating interactive digital retail experiences across stores since 2009. The new stores are intuitive and interactive and offer a relaxing and enjoyable lifestyle retail environment. They are segmented into consumer-friendly zones to meet the different needs of customers: work, home and play. A unique user-friendly feature is the interactive touchscreens that are embedded in the glass facade of the store. With them, shoppers can browse and buy music 24×7 at their convenience. Instead of the usual staff-behind-the-counter setting, the store has café-style service counters to provide a pleasant experience.
The store also features innovative services like appointment booking for all Singtel shops via MyAccount. As a result, prior to their visit, customers can check the availability of handset models at stores and make a reservation of the device they are interested in.
The author can be reached on Twitter @rankita