Communications Providers Say Retail Channel is Essential for Success, But Stores Must Evolve To Match Consumers’ Needs, Accenture Research Finds

Planned retail expansion will focus on improving customer service

NEW YORK; Sept. 21, 2010 – Three out of four global communications providers plan to open more communication provider-owned retail stores over the next two years and must cultivate an improved customer-focused experience to succeed, according to research by Accenture (NYSE: ACN).

Accenture surveyed senior executives at the world’s largest communications providers to determine if retail stores are critical to attracting and retaining customers in an age of increasing online interactions.

The executives cited three main reasons for increasing the focus on their retail operations: their customers demand stores for making purchases and interacting with providers; the stores give providers a chance to effectively up-sell and cross-sell; and, providers 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 providers 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 provider-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 that 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 that 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 that the retail channel will be crucial to communications providers’ future success.”

The recent Accenture survey of providers found that:

Sixty-two percent of the providers represented in the survey operate retail stores in Europe, 38 percent in North America, 38 percent in Asia Pacific, 27 percent in India, and 16 percent in China. When asked about the geographic areas in which providers expect to increase the number of their company-owned stores, half (50 percent) said North America, 40 percent said China, 38 percent said Africa, 33 percent said India and 32 percent said Europe.

Growth seen in targeting small businesses, home-office users

Nearly all (98 percent) 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 percent over the next two years – from 43 percent today to 53 percent. In addition, the focus on medium-sized and large enterprises in service providers stores is expected to grow at a relatively slow pace, growing four percent for medium-sized businesses (from 16 percent, to 20 percent), and growing two percent for large businesses (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 percent), educating and training store employees (65 percent), managing store inventory (64 percent), and closing stores that aren’t meeting revenue goals (56 percent).

By comparison, less than half (49 percent) 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 percent), integrating sustainability into store operations (42 percent), and hiring store managers with experience in other retail segments, integrating stores with other channels and tailoring store design and offerings to customers (35 percent).

“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.

Survey shows room for improvement in effectiveness of providers’ retail operations

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 percent), while analytical tools was rated the lowest (30 percent).

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,” Liesching said.

According to the research, leaders said their store sales accounted for 38 percent 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 percent 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 percent 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, “Liesching said. “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.”

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Accenture conducted a telephone survey of 51 executives at communications companies with annual revenues

of at least US$500 million operating in 18 countries. The survey took place between January and March 2010. These executives are in charge of the company’s global retail operations. The majority of executives described their companies as converged service providers, while one-third were predominantly wireless telephony service providers. The remaining companies were providers of cable, satellite or wire line services.

About Accenture

Accenture is a global management consulting, technology services and outsourcing company, with more than 190,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$21.58 billion for the fiscal year ended Aug. 31, 2009. Its home page is



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