Can wireless kill its retail stores? Probably not anytime soonCan wireless kill its retail stores? Probably not anytime soon

T-Mobile recently set a goal to digitize most of its customer interactions by 2027. But executives in the wireless retail business don't believe such efforts will eliminate the need for brick-and-mortar retail stores anytime soon.

"Wireless retail is not nearly as dead as people thought it would be," analyst Jeff Moore, with Wave7 Research, told Light Reading.

Broadly, Moore said the number of postpaid retail stores operated by Verizon, AT&T and T-Mobile has declined from around 18,529 in 2022, to around 17,607 today. But that's not the retail apocalypse some had anticipated at the height of the COVID-19 pandemic.

Indeed, Moore said there are some indications of an increase in wireless retail options. For example, cable companies like Comcast and Charter Communications now sell smartphones, and they collectively count around 1,500 retail locations nationwide. Further, big box retailers like Walmart are expanding their wireless retail efforts – Walmart specifically plans to add or expand 150 Supercenters by 2029. And Moore said Verizon's new prepaid brand Total Wireless now counts around 1,000 storefronts.

Moore said the push toward digital sales in the wireless industry "is not reflected in what we're seeing on the ground."

Moore's Wave7 closely tracks promotions and pricing in the US wireless industry.

The digital push

Of course, it's no secret that a growing share of US shopping is happening online.

For example, the Mastercard Spending Pulse report – which covers the entire US retail market – found that online sales were up 14.6% on Black Friday, while in-store sales rose by only 0.7% compared to Black Friday last year.

Some wireless network operators are reporting similar trends.

"For the first time in the history of our company, the majority of those [iPhone 16] preorders happened digitally," reported T-Mobile's Jon Freier, head of the company's consumer business. "They were actually up almost 50% year-over-year."

During its Capital Market Day in September, T-Mobile officials set a goal of becoming an "AI-enabled, digital-first company." Specifically, T-Mobile hopes to conduct 100% of its phone upgrades online, and fully half of its new customer activations online, by 2027.

Other operators have worked toward similar objectives. Indeed, Verizon launched its Visible brand in 2018 with the goal of creating an online-only, cloud-based operation.

Certainly, the rise of brainy AI chatbots like ChatGPT make such goals more attainable.

For example, T-Mobile hopes to use its new OpenAI deal to cut the number of calls into its call centers by 75%. In 2022, T-Mobile's call centers fielded 3 million calls per week.

The reality of smartphone shopping

According to Jason Raymer, SVP of revenue at iQmetrix, around 32% of purchases in the US wireless industry are done online. He said that's well below the overall rate of e-commerce for packaged goods in the US.

Why?

Smartphones are complex, he said, and physical stores are where customers can go to get their questions answered. In fact, Raymer said that visits to retail stores are mostly consistent across age groups – old people, young people, most end up visiting their operator's retail store at some point.

iQmetrix tracks such data via its retailing work with its wireless network operator customers.

In fact, Raymer said the rise of AI-powered smartphone services – such as Apple Intelligence for the iPhone – could drive even more traffic to operators' stores.

"Every time we've had a technology change in telecom, we've had to educate the consumer," he said, arguing that retail store technicians often help shoppers understand their smartphone's new technologies. "Who else is going to teach the consumer that?"

But Raymer acknowledged that large companies like T-Mobile have the wherewithal to change customers' behavior. "They can make it happen," he said.

But doing so, he said, could simply open the door for T-Mobile's rivals to use their own retail operations as a differentiator.