Face to face in the wireless marketplace

The four largest cell phone companies are expanding store operations to develop customer relationships

December 28, 2005|By HANAH CHO | HANAH CHO,SUN REPORTER

The nation's four largest cell phone companies are expanding their brick-and-mortar retail operations as they fight to retain customers in the fiercely competitive wireless market.

Carrier-owned retail outlets provide more opportunities to develop continuing relationships with customers and woo them into accessories, services and equipment upgrades of the latest and coolest gadgets, say wireless analysts and mobile phone executives.

The retail storefront strategy has become increasingly important as the cellular market gets more saturated. Mobile phone users are willing to switch carriers because they can take their telephone numbers with them. And cellular companies expect competition to intensify as technology evolves and new products and cheaper services are introduced.

"The whole game has changed," said Kanishka Agarwal, vice president of new products at Telephia, a mobile technology market research firm in San Francisco. "Before, the game was who's adding more subscribers. The game now is who's retaining more customers."

Because most customers have come to rely so much on their cellular telephones and many prefer to buy the technology in person, mobile phone companies believe that they can stay ahead of their competitors by offering better service. To that end, cellular companies are hiring more customer service help and providing technical support and self-service kiosks.

Michael Copeland, manager of a Verizon store in Pikesville, said that up to 70 percent of the store's traffic involves customers looking for equipment and service upgrades, service and technical support. Similar traffic volume is seen at other wireless carriers' stores.

And since many cell phone users have become so attached to their devices, there often is an urgency for customers to get their devices fixed quickly.

Just ask Kim Clark, 44, of Owings Mills, who dropped by the Pikesville Verizon store recently because her Motorola phone battery wasn't recharging.

As Clark put it, "If your phone is an integral part of your everyday life, I can't get on the Internet and order something, I need it that day."

Such die-hard users have a "great attachment to their cell phones because they're little representations of themselves," so they care about how their phones are treated and what happens to the devices, said James Katz, director of the Center for Mobile Communication Studies at Rutgers University.

The saturation of wireless stores is hard to ignore. Cingular, Verizon Wireless, Sprint and T-Mobile each opened new stores this year in the Baltimore-Washington region, a key market for residential and business customers and government accounts.

And since the majority of consumers like to buy their mobile telephones in person, cellular companies see their name stores as an initial contact. In fact, 68 percent of all phone and service purchases are made at carrier-owned stores, says the NPD Group, a marketing firm in Port Washington, N.Y.

Walk into any Verizon Wireless store, and a greeter directs customers to sales, customer service or technical support.

During lunchtime on a recent Thursday, the Pikesville Verizon store bustled with customers seeking all kinds of help, ranging from phone replacements to battery difficulties to buying new devices and accessories. At some store locations, sales associates report customers waiting outside for the store to open, said spokesman John Johnson.

Besides company-owned stores, wireless carriers have other means of retail sales, including third-party distributors like Best Buy and Circuit City, and company online stores. But such stores primarily cater to customers who are doing comparison shopping at chain retailers or know exactly what they want in the case of online shopping, analysts say.

"We recognize that it's extremely important to maintain your customers," said Rob Roche, director of national sales operations for T-Mobile USA. "One way to do that and control the customer experience is by expansion of brick-and-mortar."

The wireless carriers that have added stores in this region during the past year include:

Cingular added 10 stores this year in the Baltimore-Washington area after nearly doubling its retail operations because of its merger with AT&T in 2004. Overall, the carrier operates 2,100 stores nationally.

Sprint converted all Nextel stores into its name-brand stores after the two merged. It operates 81 stores in the region, including five new locations this year. Of its 1,600 stores nationwide, 112 of them were opened this year.

T-Mobile opened nine stores in the region this year for a total of 42. Nationwide, it added 150 stores, bringing the total to 1,200.

In the past two years, Verizon increased its retail presence by 10 percent, to 37 stores, and added 40 percent more staff in the market. Overall, the company opened 98 stores across the country for a total of 1,200.

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