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Digital is the new solution for telco retail distribution

Anurag Gaur
Anurag Gaur • 6 min read
Digital is the new solution for telco retail distribution
Every telco operator must ask: What is the best retail channel that resonates? / Photo: Albert Chua
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The onset of the pandemic has accelerated the rise of digital consumption and change in consumer habits. Coupled with a slowing global economy and softening macro environment, companies have had to alter how they interact with customers to remain relevant and top-of-mind.

For telcos, this means reevaluating their retail strategy as they seek to rethink their retail footprint to cater to evolving consumer demands. Today, while many customers are researching products online, some still prefer to make the final purchase offline.

Providing a seamless omnichannel customer experience that seamlessly integrates offline, mobile, and online sales channels is critical. This has led telcos to strengthen their digital channels further and provide a tight connection between retail stores and digital.

The Asia-Pacific region is emerging as a hotbed of innovation for making physical retail stores work well with digital sales channels. Some telcos in countries with a more advanced mobile trend plan to shed up to 30% of their old stores and offer more routine services online, like bill payment, upgrades, and even handset purchases.

The look and feel of retail are changing as simple tasks are pushed online or to third-party providers to lower costs. Physical stores are getting smaller or being converted into experience centres where customers can interact with and learn more about their products.

When looking to the end of the decade, every telco operator must ask: What is the best retail channel that resonates? One example of a potential solution comes from Singtel, the Singaporean telecommunications provider that leveraged old assets to create something new that worked with its digital strategy.

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In 2021, Singtel converted phone booths into 24-hour unmanned, self-service kiosks called Unboxed Lite, an offshoot of its pop-up stores called Unboxed. Users can step into the futuristic former phone booths and pay bills, sign up, replace a SIM card, or use WiFi with the help of a voice-assisted chatbot developed in-house. They showcase new technology, such as 5G or games.

Emerging trend

Singapore’s experience underscores what our analysis has found is a trend across the industry: Telco stores are shifting from product-centric to solution-centric. Just as in the city-state, telco stores are increasingly becoming digital. The physical location is becoming more of a showroom and an experience centre where companies can build relationships with their customers, translating into sales that might be completed online.

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Companies can showcase digital solutions or educate clients about products and services. Sales teams freed up from the routine of simple transactions have time to build relationships with the clients by walking them through products and services.

Our view is that the best prospects for telecommunications retail are to develop flagship high-end stores for brand development while offering a range of simpler outlets to handle routine transactions.

High-end shops are a platform to develop and communicate the brand through in-store experiences. It is a venue for demonstrating and promoting new products and services using new technologies — 5G, AI, AR and VR — to create distinctive in-store experiences.

There will still be express outlets such as small stores, booths in convenience shops or standalone kiosks in malls that facilitate transactions such as paying bills or collecting SIM cards, phones, or accessories bought online. Such outlets will be increasingly automated. Partnerships with third-party retailers to sell recharge top-up cards will continue to be important, particularly in heavily prepaid markets.

The new blueprint

There will still be a need for standard high-street shops, such as to cater to an older demographic or clients who prefer in-person service, but there will be growing roles for new types of stores and outlet formats.

One example comes from South Korea’s SK Telecom, which in 2020 opened T Factory, a three-storey flagship retail and experience store with multiple zones to showcase cutting-edge technology and offer self-service digital kiosks for customers to use.

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This kind of branding is essential. Our research shows that bundling mobile and other home Internet of Things (IoT) services is one of the most effective ways to reduce telecom customer churn.

The blended online-to-offline model, sometimes called O2O, also lowers logistics costs as more customers prefer to purchase online but pick up in retail stores. A strong online presence can allow telcos to leverage customer data to provide better and more targeted offerings.

Below, we offer a blueprint for the new blended physical retail store model:

Become a digital touchpoint: Bricks-and-mortar stores are offline touchpoints connecting customers with the digital world, and consumers expect consistent and seamless service across all channels. City-centre stores are technology hubs to inspire customers to try new digital products and services or make click-and-collect purchases. The flagships showcase the company’s cutting-edge technology, designed to displace with customers their old notions of a legacy services provider.

Showcase digital solutions: Move beyond offering just phones and associated services. As some firms already do, develop thematic store areas to promote services and solutions around the smart home, office, personal entertainment or health. Such spaces can be used to educate the public about new trends beyond the slim set of early adopters.

Improve digital simplicities: Operator stores can also be a destination for bringing simplicity and convenience to the local community. Offer multiple consumer services, including mobile sign-ups, bill payment, SIM replacement, and WiFi connections, assisted by both real person remotely and intelligent AI bots. Roll out terminals to replace expensive stores. Telco kiosks and stores can also assist in paying utility bills such as water and electricity, especially in some developing countries and regions where digitisation is less advanced.

Close digital gaps: Stores can be centres of teaching for elderly customers or others who may face a gap in digital literacy for mobile usage, smart homes, and wearables to support personal health. Telcos in some Asian Pacific countries have introduced digital classes to address this need for those with lower digital confidence. The courses are open for registration through a simple web portal, where users will learn to make calls, take photos, navigate with maps, shop online, and pay online — they have garnered millions of users.

The new face of telecom retail will be a combination of the online and offline world and seamless integration to address the needs of a broad range of clients. Automation and digitalisation will play a larger role, and brands will increasingly launch flagship experience stores to highlight the newest technology and drive brand awareness.

Anurag Gaur is a knowledge expert and team manager, telecommunications in Southeast Asia at the Boston Consulting Group

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