Retail channel still critical finds Accenture survey

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Despite the growth of the online channel, retail stores still remain critical to attracting and retaining customers. That is one of the key findings of a new Accenture survey of senior executives at the world’s largest communications companies; primarily wireless telephony service providers plus suppliers of cable, satellite or wire line services.

The executives cited three main reasons for increasing the focus on their retail operations:

  • Their customers demand stores for making purchases and interacting with suppliers
  • The stores give suppliers a chance to effectively up-sell and cross-sell
  • Suppliers can teach customers how to use their products and services

In an Accenture consumer survey conducted earlier this year, more than 3,000 consumers in 18 countries were asked how the physical retail channel impacts their relationships with communications suppliers based on their retail store visits, in-store experiences and expectations.

According to that survey, three out of four consumers prefer shopping in a communication supplier-owned store when buying a communications product or service.

“We think operators can better leverage one of their most effective tools: the retail store,” said John Liesching, executive director, retail, communication practice, Accenture.

“Our research has revealed consumers want and value a compelling experience at the point of purchase which is especially important as devices become more and more complex. Our research confirmed consumers want to touch and feel these devices, as well as learn how to get the most out of them – and the store becomes the perfect place for that experience. There is mounting evidence the retail channel will be crucial to communications providers’ future success.”

The latest Accenture survey of suppliers found:

  • More than three-quarters of respondents (76%) said they plan to increase the total number of storefronts through which they sell, primarily with company-owned stores.

  • Eighty-eight percent of executives said a strong physical retail channel is either important or very important to their company’s current growth strategy, and 84% of those surveyed said retail stores would remain important or extremely important over the next two years.

  • Respondents expect the physical retail channel to represent a larger percentage of total annual sales over the next two years, growing from 43% to 50%

Sixty-two percent of the providers represented in the survey operate retail stores in Europe, 38% in North America, 38% in Asia Pacific, 27% in India, and 16% in China. When asked about the geographic areas in which providers expect to increase the number of their company-owned stores, half said North America, 40% said China, 38% said Africa, 33% said India and 32% said Europe.

Nearly all (98%) respondents said their company would continue to use storefronts to target consumers over the next two years, with an increased focus on small businesses and home-office customers. Seventy-five percent foresee growth among small- business and home-office users. In fact, according to the respondents, communications providers will increase their focus on small businesses by 10% over the next two years – from 43% today to 53%. In addition, the focus on medium-sized and large enterprises in service providers stores is expected to grow at a relatively slow pace, growing 4% for medium-sized (from 12 percent, to 14 percent).

According to the research findings, respondents’ views differ regarding the way their retail stores are performing.  On the positive side, respondents think their companies perform well or extremely well in choosing a store site (70%), educating and training store employees (65%), managing store inventory (64%), and closing stores that aren’t meeting revenue goals (56%).

By comparison, less than half (49%) of the executives said their companies’ stores performed well or extremely well in understanding the needs and behaviors of customers in each store’s geographic area, creating differentiated products, promotions and events (44%), integrating sustainability into store operations (42%), and hiring store managers with experience in other retail segments, integrating stores with other channels and tailoring store design and offerings to customers (35%).

“As the complexity of capabilities increases, the providers’ ability to deliver those capabilities decreases,” said Liesching. “This is a perfect opportunity for some providers to capture market share by accelerating their retail capabilities to fulfill consumer needs.”

In the earlier Accenture consumer survey, three out of four consumers said they are not very satisfied with the store experience and rated it only slightly better than average, reflecting the providers’ assessments regarding their stores’ performance.

Executives were also asked about their companies’ maturity in six key retail capabilities: standardized operating procedures, talent management, information systems, performance metrics, supply chain and use of analytical tools. Having a standardized business process across all stores was rated the highest (67%), while analytical tools was rated the lowest (30%).

The survey identified a sub-set of providers, termed “leaders,” whose executives said they had mature retail capabilities across the six key retail attributes. “Our research suggests a strong correlation between robust retail capabilities and strong store performance,” said Liesching.

According to the research, leaders said their store sales accounted for 38% of their total sales revenue, compared with providers whose retail capabilities were rated less mature across the six categories and whose sales account for 23% of total sales revenue. Forty-two percent of leaders expect their total sales revenue in retail stores to increase over the next two years; 26% of the providers with less-mature retail capabilities said they expect their total sales revenue at retail stores to increase over the same time period.

“Many companies are aggressively building stores to develop and strengthen relationships with consumers,“  said Liesching. “As they embark on their retail push, communications providers should set their strategy, integrate the channels to provide a consistent level of service across all retail channels – stores, the web, call centers, kiosks or franchises – to create an experience that makes it easy for consumers to purchase new products and services. This means they must ensure that staff is trained and knowledgeable, able to manage inventory to meet customers’ needs – and lastly, but most importantly, understand the customer by geography and segment.”