Following Three Ireland’s recent announcement on their investment of €27 million to revamp their stores as they introduce their suite ‘Smart Lifestyle’ products, David McGlew, Marketing Director of Openet, discusses the future of retail for Telcos.
If you are to look at recent developments in the UK, you might think that retail for Telcos is nearing its end. Carphone warehouses used to be one of the UK’s biggest independent retailers, selling phones and tariff plans for several leading Telcos in the market. In March 2020, they announced they were closing 531 stores in the UK and a year later in March 2021, they closed 85 stores in Ireland, citing a change in buyer behavior, a migration to SIM-only tariffs and consumers breaking the link between their phone ownership and their tariff plan. You might say this is old news and signposts a trend across multiple markets globally. Well, an announcement this week from Three Ireland bucks this trend and has got me thinking about the role of retail as a sales or service channel for Telcos.
Three Ireland is investing €27 million to revamp its stores across the country as the company shifts its retail focus to include its ‘Smart Lifestyle’ products. They will continue to sell handsets in their stores, but will now add to their offering a series of ‘Smart Lifestyle’ products such as Smart hubs, Mesh Wi-Fi, robot labor-saving devices (robot vacuum cleaners), audio and visual products, as well as security solutions for consumer homes. Stores will initially be divided into four themes - Home, Work, Music and Play. The initiative is based on a research Three Ireland carried out, which surveyed a consumer panel of 100 participants on Three Ireland's products.
In Three’s press release, they cite a recent research report* that finds that 60% of respondents agree they prefer shopping in-person to shopping online, in spite of the huge shift to online shopping that has been observed since COVID-19 first hit in March 2020. At the heart of this is the access to in-store expertise which only the retail experience can offer. When it comes to these new range of ‘Smart Lifestyle’ products, it seems that 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 mainstream retailers, I believe 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: Telcos need to improve and widen the services they are offering to their customers.
Firstly, improvements to operators’ product portfolio falls into two categories: quality of service (QoS) and personalization. With the advent of 5G and leveraging the capabilities of AI and ML, Telcos can now deliver a combination of improved quality and personalized services. You might think that with the mention of AI and ML, we have moved firmly into the digital-only world with no link to the bricks and mortar world of retail, but not so. I believe that the often-cited strategy of ‘Omni channel’ (including bricks and mortar) comes to the fore here and digital endpoints with embedded AI and ML are key enablers of enhanced customer experience, which should see consumers move seamlessly between online and physical retail channels.
In terms of widening their offerings, partnerships with 3rd parties play an important part in identifying new revenue streams or categories, as with the Three Ireland’s ‘Smart Lifestyle’ range that boasts extra categories of products in addition to handsets and mobile broadband. Telcos have been slow when it comes to creating and enabling these partnerships as historically, it has been expensive and complex to expose their networks and IT systems to 3rd parties. From an ROI perspective it has not been particularly attractive unless a real scale of growth is possible. 5G makes this easier for Telcos, with new network functions, such as NEF (network exposure function) and cloud native monetization solutions built as micro services. With these capabilities it’s much easier and more cost-effective to open up their networks to 3rd parties. On the vendor end, as we go about the business of enabling our Telco customers to build the capabilities to engage in these partnerships and create new revenue streams, it is exciting to see the likes of Three Ireland buck the trend in Telco retail and offer a new category of products and services. We’ll be watching with interest on how the market evolves as digital enablement will be key to new service offerings, but at the same time, a combination of bricks and mortar and digital endpoints will serve as an optimal mix to boost the take-up of Telco services.
*Research carried out by Foresight Factory in March 2021
