The Indian telecom subscriber base has grown at an exponential rate, surpassing the billion mark in mid-2015. While this has been achieved mainly on the back of rapidly increasing and improving operator service and technology networks, it is as much an outcome of the growing operator retail footprint. Over the years, telecom players have banked on their vast network of stores for facilitating people-to-people interactions to build their brands.
Retail stores are strategic touchpoints, which allow operators to showcase their offerings to customers and assist them with technical and delivery issues. Users typically visit an operator’s retail outlet for subscribing to a new connection, for enquiring as well as for registering requests and complaints. Branded stores help operators in displaying their new products, thereby allowing consumers to perform in-store testing of these products such as checking the internet speed or facilitating downloads/apps.
Besides strengthening an operator’s sales and distribution activity in Tier II and Tier III cities, these stores have been instrumental in helping operators make inroads into rural areas. For instance, it is on the back of a deep-rooted retail network, supported by a strong sales team, that Idea Cellular has managed to build a broad customer base – every two out of three new subscribers come from rural areas. The sales team mostly comprises locally employed people, who know their areas like the back of their hands and thus can help Idea obtain a wider spread in rural areas. Similarly, Vodafone’s retail strategy in the rural areas includes the setting up of associated distributor Vodafone mini stores, commonly known as Laal Dukaans. There is a lot of hand-holding required by operators in rural areas to assist users in recharges and bill payments, top-ups, data packages, etc., as most of them are first-time users.
Further, these brick-and-mortar stores have continued to hold their own in the face of growing competition from online platforms that provide easy access to users. As per industry experts, customers still prefer to meet a company executive in person rather than have an issue resolved online. This is also evident from the long queues at most operator-branded stores. Interestingly, this phenomenon is not limited to semi-urban and rural areas, but is equally prevalent in metro and Tier I cities. For instance, Mumbai, despite having a huge number of online users, is amongst the circles that witnesses the longest queues and waiting times across retail stores.
These stores have also helped operators in cross-selling, upselling and educating customers about new plans and devices, especially in the wake of the introduction of new technologies and data services. According to McKinsey’s Customer Lifecycle Management survey, in-store education in the telecom space can increase the likelihood of data product usage multifold.
The nature of queries has also undergone a change with changing telecom sector dynamics. These are now mostly central to internet plans and usage, as well as smartphone applications. Of late, these stores have become central to the 4G strategy of several operators. For instance, Vodafone India has adopted a strategy of making 4G SIM cards available at its self-branded stores prior to their launch in a particular city.
A look at the retail footprint of various operators, as well as their plans and strategies…
The country’s largest telecom player, Bharti Airtel has 2,350 branded stores. Of these, about 350 are exclusively company owned and about 2,000 are franchisee retail stores. Most of the company-owned and company-operated stores have a staff strength of over five people and aim at quality service engagement. These stores also offer dongle and broadband connections.
Vodafone India has a robust retail channel comprising around 9,800 branded retail stores. These stores are organised in a three-tier format, depending on their location. In the metros, the company follows a hub-and-spoke model with the larger units, and has over 700 Vodafone Stores. Of these, about 200 are Global Design stores, which, apart from offering a slew of regular services, familiarise customers with the range of apps that smartphones offer. In addition, there are over 3,400 Vodafone ministores, similar in functionality but closer to consumer locations. Finally, in small towns and villages, the company has 5,800 rural stores or Laal Dukaans.
The company has also introduced the concept of Angel stores in India. These retail stores are managed and run exclusively by women. Currently, Vodafone operates over 34 Angel stores across the country.
Idea Cellular has 800,000 square feet of retail space spread across 7,200 stores in 5,200 towns. It has launched retail stores under different names and formats such as My Idea, Idea Point, Idea Service Points, and Idea and U showrooms, to cater to the evolving needs and demands of mobile consumers.
The operator has large-format stores that are established on high streets and are leveraged to display new technologies, apart from being a connect point for customers. The large-format stores are owned and run by the company to control customer experience. Besides Idea Services stores, most of the other stores offer handsets, dongles and bundled services. Idea’s small-format stores in rural areas and semi-urban areas have been established primarily to cater to the prepaid market and rural consumers. Idea also has franchise stores.
Reliance Communications’ (RCOM) retail backbone is made up of a combination of exclusively franchised Reliance Mobile Stores along with independent third-party retailers. The company has nearly 1,600 franchised Reliance Mobile exclusive stores spread across more than 450 cities and towns, offering customer activation and after-sales services. Its third-party retailer presence includes nearly 600,000 outlets.
The company has recently initiated the launch of full-service, franchise-owned-and-operated retail outlets offering a complete suite of services, including innovative self-care options, to customers.
Telenor India currently has over 2,000 exclusive branded stores across its six operational circles. These are exclusive Uninor sales and service outlets that offer support to customers on product schemes and activation. During 2014, the company launched 362 stores in one day, the largest such launch by any telecom operator in the world. The company’s retail management system captures data from various sources and provides real-time updates on sales and inventory. This ensures that the stores are updated with all the information that a customer may want at any given point in time. An automated commission model provides commission to third-party partners on a real-time basis. Telenor India’s retail model is now being replicated in the Norway-based group’s other Asian markets like Myanmar and Thailand.
In 2014, Aircel launched its Xpress Stores, which are based on a special format designed to familiarise customers with the company’s mobile internet technology. These are based on the franchisee-owned, franchisee-operated model, with their presence spaced every 3-4 km in most cities. The company had about 650 Xpress Stores at the beginning of September 2015, and plans to reach the 1,000 mark by March 2016. It is further aiming to take this number up to 2,000 by the end of 2017.
Meanwhile, Bharat Sanchar Nigam Limited (BSNL) has close to 500,000 franchises or retailers. These outlets have the option of post-paid payment of bills, which earlier had to be submitted only at BSNL counters during working hours.
The rapid growth of e-commerce notwithstanding, brick-and-mortar retail stores remain central to an operator’s distribution strategy. This is evident from the rate at which the retail space of the incumbents has grown over the years. For instance, Vodafone’s retail footprint covers 1.5 million square feet of retail space. For Airtel, the number stands at 1.41 million square feet and for Idea it is close to 0.8 million square feet.
Further, as more subscribers come on board the 3G/4G platforms and use data services, the need to physically visit a store for the first-time experience would be immense, particularly in Tier II and Tier III cities. Also, higher data uptake in rural areas will make a compelling case for investments in physical retail stores in these areas as customers will require personal interaction for advice and for understanding offers. Operators can use this as an opportunity to not only meet customers’ retail needs but also create brand awareness and influence purchase decisions.
Akanksha Mahajan Marwah