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T-Mobile's Front Line Strategy: Retail Expansion

Thu, 05/24/2012 - 10:35am
Maisie Ramsay

Much of the focus on T-Mobile USA's turnaround efforts has been on its LTE launch and rebranding.  

But beyond the new mobile broadband service and the symbolic change of its spokeswoman's wardrobe lies the front lines – its retail stores. 

T-Mobile is moving aggressively to open more brick-and-mortar locations. A big part of its strategy is what it calls its "T-Mobile Premium Retailer" program, or TPR, an initiative that started in 2007 to allow outside companies to run T-Mobile-branded retail stores. 

The locations run through the Premium Retailer program are identical in appearance to stores owned by T-Mobile. That’s a big difference from independent dealers, who typically go with their own store formats.

To a lay person, there's no way to distinguish between a store owned by T-Mobile and a store operated by a third party through the TPR program – same employee dress code, same training, same inventory, same internal systems. 

The only difference is that they're owned by entrepreneurs with knowledge of the local market instead of corporate employees in far-off offices. 

Tmobile retail two

At the beginning of 2011, T-Mobile had 450 stores operating through the program. It opened 375 locations last year during the turmoil of the proposed AT&T merger and is on track to open another 375 stores this year. It passed the 1,000 mark this week with the opening of a store in Pompano Beach, Fla.  

By the end of 2012, it plans to have 1,200 TPR stores nationwide. That's more than one-third of the 2,000 company-owned locations it expects to have open by year-end.   

Michael Sentowski, vice president of national dealer programs, said in an interview that before the TPR program got started, T-Mobile was "lacking distribution."

"Our competitors had a stronger foothold in branded distribution," he said. "We felt the best way to get there was with third-party partners."  

Sentowski said the retail stores that run through T-Mobile's Premium Retailer program are integral to the operator's performance goals.  

"It all comes down to driving churn down and loyalty up," he said. "We've got to continue to build stores where our customer base is. That's something we've been lacking." 

T-Mobile has been adding TPR stores at a faster clip than company-owned stores. An average of 240 TPR stores have been opened each year since the program got its start, compared to an average of 100 company-owned locations opened each year. 

Neither Sentowski nor a T-Mobile spokeswoman could comment specifically on the program's financial benefit to the operator nor could say how much autonomy store owners had when making decisions. 

Carl Ducato, president of TPR participant Catcorp, told Wireless Week it was "obvious it was going to be very successful" when he sat down with T-Mobile to discuss the program.  

The initiative was so compelling that Catcorp decided to exit its businesses selling phones for other providers and make T-Mobile its exclusive focus.  

Ducato declined to comment on specifics of Catcorp's contract with T-Mobile, but said Catcorp gets paid on commission for products and services. 

Since it opened its first T-Mobile-branded stores in June 2009, Catcorp has added about 40 additional stores in the Miami, Atlanta, Tulsa, Wichita, Kan., and Springfield, Mo., markets.  

"We're committed to growing our business," Ducato said. More store openings are planned for later this year as part of T-Mobile's broader expansion efforts.

T-Mobile is also in the process of remodeling both company-owned and TPR stores. It overhauled 700 stores in 2011 with a new design and will remodel the remainder of its locations this year. 

T-Mobile may be in the midst of a major retail expansion, but that doesn't mean it's indiscriminate in where it opens new stores. Like other operators, it has detailed specifications for where new sites should be located.

According to documents provided by the operator, potential sites should be located near shopping centers serving minimum populations of 75,000 within three miles of the store.  

High-traffic areas with car counts between 25,000 and 50,000 per day are "ideal," and T-Mobile prefers areas with a strong residential and daytime population with a median household income of $40,000 or more.  Other characteristics sought in a potential site include shared parking, signage, and square footage between 1,000 to 2,500 square feet with at least 20 feet of frontage. 

 

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