Perfect storm of changes impacts wireless retail — Moore

Transformation of wireless retail is driven by a desire to cut costs while improving customer care.  (Jeff Moore)
Jeff Moore Industry Voices

Major changes are unfolding at carrier retail.  The catalysts for change were the pandemic, digital transformation and the acquisition of Sprint. The results in 2021 will be a smaller retail presence, a lower reliance on corporate stores and dealer consolidation.

These changes are not a bolt out of the blue. At CES 2021, Verizon CEO Hans Vestberg said, “As COVID-19 began to spread around the world, we leapfrogged five to seven years in the digital revolution, speeding up the timeline for work-from-home, distance learning and telemedicine.”

Vestberg was right. Digital transformation was already in the works, with all carriers working on changes in recent years. Digital transformation is driven by a desire to cut costs while improving customer care. Sprint was particularly aggressive on this front, hiring Comcast veteran executive Rob Roy as Sprint’s chief digital officer.  As seen on this Adobe blog, Roy was the head of “a team of about 120 bright minds” that operated out of Reston, Virginia. Sprint had a goal of closing call centers, while largely moving customer care to apps and to online processing. Sprint may have been the most vocal about digital transformation, but other carriers had similar efforts in the works.

The prequel: Changes in 2020

Carriers mostly were already reducing the number of stores, but this was happening at a modest pace. Online efforts and app usage were reducing the need for store visits.

Then, the pandemic hit. Many stores closed and even today, not all are open. Imagine the joys of paying a lease with no revenues from store sales. Customers were urged to avoid stores, while transacting most business online and via apps.

RELATED: Moore: Prepaid in 2021 – 4 competitive trends to watch

Carrier employees adapted and did customer care from home. AT&T adapted, accelerating phone deliveries via its Ready to Go delivery service. AT&T and Cricket Wireless both launched video chat options. Buying online and picking up in stores was touted.

T-Mobile assumed control of Sprint on April 1, 2020, less than a month after the pandemic broke out. Sprint stores were often near T-Mobile stores, so the logic of closing stores was obvious. The carriers had nearly 9,100 stores, but T-Mobile is now claiming to have more than 7,500 stores.

How are all these changes impacting carrier retail?

Response #1:  Verizon’s retail reorganization

FierceWireless recently reported that Verizon is undergoing a major reorganization of retail. Many indirect account manager positions have been eliminated, and many store managers are now managing two stores instead of one.  Vestberg’s remarks foreshadowed this move, and the digital revolution made a cost reduction inevitable. Besides, Verizon has a heavy debt load and is looking for ways to reduce costs. The carrier only closed a few stores during 2020, but I expect store closings to accelerate in 2021.

Response #2:  Stores are increasingly dealer-operated

Wave7 Research recently reported that AT&T is shifting the mix of its stores from corporate stores to authorized retailer stores. Prime Communications, AT&T’s largest dealer, has taken over the operations of dozens of stores that had been corporate stores.

FierceWireless reported in November that Cricket Wireless no longer has any corporate stores. The carrier has approximately 4,400 stores – all operated by authorized retailers. Only a small percentage of Cricket Wireless stores were corporate.

Verizon is likely to become more reliant on dealers. Already, corporate stores only account for roughly 20% of all Verizon stores.

Response #3:  There is consolidation of authorized retailers

T-Mobile is pushing its dealers to consolidate, Wave7 Research recently reported. For example, Wireless Vision – a top T-Mobile dealer – recently acquired Wireless Lifestyle, which operated approximately 160 stores. Connectivity Source – a T-Mobile dealer that used to sell Sprint – has tweeted about its acquisition of 52 stores from BrightStar Wireless. Metro by T-Mobile and Boost Mobile have also been pushing for dealer consolidation.

Why consolidate dealers? One reason is “fewer throats to choke,” which reduces the need for a large number of account managers. Also, carriers can turn the page on less effective dealers while empowering more effective dealers.

Changes to store formats?

Verizon currently operates six Verizon Express stores, promising “touchless pickup in four minutes or less,” with most of the transaction completed in advance online. Seems like just what the doctor ordered amid a pandemic, more online shopping, and cost-cutting. Verizon’s plans for this store concept are unclear, but I would not be surprised to see Verizon invest in this effort.

This would be an interesting example for other carriers and retailers. Apple has done something similar, as most of its stores currently operate by appointment only, using a small amount of the stores’ floor space.

Will these developments mean the death of carrier retail?  Not by a long shot.

In 2017, long before becoming T-Mobile CEO, Mike Sievert wrote an editorial, “Long Live the Store!”  It was a passionate defense of carrier retail. “Our stores are transforming into expertise hubs, brand showrooms and fulfillment centers that curate a better retail experience for the customer,” Sievert wrote. He made a case for “digitally accelerated retail,” arguing that “digital enriches retail” and that “retail augments digital.”  I think this is a profound insight, that digital and retail are not a zero-sum game, but can be mutually reinforcing.

People care passionately about their mobile experience. It makes sense to have easy access to expertise and to find ways to protect devices that now can cost more than $1,000. Besides, carriers now have more to sell, with TVision from T-Mobile as an example. T-Mobile and Verizon have made announcements about wireless home internet.

Also, Comcast and Charter are opening more stores and kiosks. The approach Dish Network will take is unclear, but the company is learning rapidly via Boost Mobile, which has great expertise about prepaid retail.

Perfect storm

This is a tremendous amount of change in a short amount of time. The pandemic, the end of Sprint and the sharp rise of digital transactions have resulted in a perfect storm of fewer stores, dealer consolidation and a reduced presence of corporate stores.

Jeff Moore is Principal of Wave7 Research, a wireless research firm that covers U.S. postpaid, prepaid, and smartphone competition.  Jeff has 25 years of telecom industry experience, including 13 years of competitive intelligence work for Sprint. Follow him on Twitter @wave7jeff.

Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceWireless staff. They do not represent the opinions of FierceWireless.