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Are Consumers Ready for a Change in Wireless Retail?

Recently, a company called Independent Mobile, or IMO for short, opened its first store in the Columbus, Ohio area. While the opening of a new store is hardly newsworthy, the concept behind IMO is unique and worth discussing in greater detail, especially in the midst of the wireless industry’s heaviest selling season of the year.

Within the next few years, Boston-based IMO hopes to open several hundred stores in the top 50 to 75 U.S. retail markets. Like other retailers such as Best Buy, Wal-Mart and Radio Shack, IMO will sell several carriers’ brands. What makes IMO stand apart is its take on the already cluttered wireless retail market. IMO aims to create an environment where customers can browse, learn and explore their wireless options -- to in essence create a high end wireless haven -- similar to the concept used by Apple or Sephora stores. In this case, IMO would be strictly focused on wireless devices and services. While IMO will naturally face competition from carrier stores and other retailers, but is the consumer ready for such a concept?

Based on the latest NPD information, the answer appears to be yes. Recent findings in NPD's Wireless Retail Trends report indicate that satisfaction with the wireless retail shopping experience is low. In fact, just 24 percent of recent mobile phone purchasers stated that they had an “excellent” or “good” experience. In addition, the study shows that consumers clearly want more, with 40 percent of recent mobile phone purchasers stating that they wished the retailer store where they made their purchase had either more devices or calling plans available.

In terms of customer acquisitions today, carrier-owned stores dominate the market with about two-thirds of total retail sales, with Verizon Wireless, Cingular, Sprint Nextel and T-Mobile leading the way. But surprisingly, survey respondents ranked the carrier stores lower in terms of satisfaction and other purchase motivators than most third party retailers. This finding is even more interesting because in recent years, carriers have made an aggressive push toward acquiring customers at their company-owned stores. Carriers state that they have improved the shopping experience by taking steps such as educating the sales staff, installing “self-serve” computer kiosks, and reorganizing stores to improving layout and flow. Despite their efforts, carriers are still falling short with consumers.

The main reason that consumers rank third-party retailers higher than carrier-owned stores may be related to the issue of “choice.” Many consumers view carriers as "limited," because they lack a wide variety of devices and calling plan options. Retailers, on the other hand, typically offer shoppers more carriers to choose from; therefore, more devices and calling plans are available to browse through. In essence, retailers help simplify the wireless shopping experience and allow consumers to evaluate a greater portion of the market.

While carriers will no doubt continue to push sales toward their company-owned stores, changes in the wireless landscape, such as the emergence of converged devices and MVNOs, could also offer new opportunities for different distribution channels. Even with the U.S. market moving closer to saturation, there remain many opportunities for retailers big and small. And, in this time of consumer discontent, a new shopping experience like IMO may be just what people are looking for.

— Charul Vyas, Senior Wireless Specialist