Business Review

Telecom firms increase points of sale

The points of presence of telecom operators have continued to mushroom this year as the firms opened new stores, but also strengthened ties with their partners to have more points of sale (POS) for their products and services. The business model varies depending on the company. Some operators, such as Orange, have relocated, or re-negotiated the rent they pay for retail locations and opened new POS in franchise. Others, such as Romtelecom and UPC, have come up with new concepts to better present their products.

Otilia Haraga

Orange, the largest telecommunication operator on the market, currently has 98 of its own stores, approximately 800 points of sales through company partners and 50,000 pre-pay points of sale. The operator has 10,995,000 customers and posted revenues of EUR 1.055 billion in 2009.

“Since last year, Orange has re-thought the distribution network of its products and services to achieve optimal points of presence and distribution network, in the context of a mature market and the economic crisis,” says Florin Popa, sales and distribution director of Orange Romania.

He goes on: “As part of this process, some of the points of sale were closed to eliminate redundancies, and new stores were opened in other areas where the potential was high. Our partners with small and medium networks played a major role in this transformation process: they opened points of sale in franchise and closed units which were not yielding profit, while the network of stores in rural areas continued to operate as it had until now.”

Since the beginning of the year, 35 stores were opened in the franchise system (under Orange Store) while last year the company opened 114 such shops under franchise. This year, Orange also set up its own store in the Sun Plaza mall in Bucharest. On average 180,000 visitors a week visit Orange’s own-store network (Orange Shop).

“This year we will continue with the project of transforming high-performing stores into franchise and also inaugurate several more tens of Orange Store units,” says Popa. “The investment in opening an Orange Store is around EUR 150,000. For franchises, the costs of opening a store are split: Orange supplies the furniture, the merchandising and signage products, while the partners bear the costs of civil works and getting the store to Orange standards.”

He goes on: “This year we have relocated a store in Bucharest and we are watching areas with high commercial potential for other possible relocations. We have opted for a mix of street locations and commercial spaces, depending on their potential.”

Orange has renegotiated rents for almost all its commercial spaces and is now paying 25-30 less.

Vodafone, the second largest telecommunication operator in Romania, currently has over 220 stores all over the country. This includes the distribution networks the operator has acquired over the last two years. To these can be added the several hundred stores of the company’s partners who sell Vodafone services and products, according to company officials.

Vodafone had 9,663,000 clients on December 31, 2009. The operator posted revenues in excess of EUR 1.1 billion for the year ending March 31, 2009 and a 0.7 percent growth year-on-year.

Cosmote Romania, owned by the Greek group OTE, which last year bought local operator Telemobil (Zapp), has a national sales distribution channel which currently numbers 740 stores across the country, including 17 Cosmote Romania stores, six shop-in-shops together with Romtelecom, and approximately 250 Germanos stores.

“Like any retailer, we are constantly looking to improve our network, both in terms of number and quality. In order to achieve this, we permanently shape the network so that the criteria mentioned above are met. This means that we open or relocate our stores to areas that are in line with certain premises,” say Cosmote Romania officials. These premises are located depending on where the operator prefers commercial compounds or malls. Traffic potential is another criterion taken into account, as is the location set-up, which means that the space should be able to house all the necessary facilities. “The investment in opening a new store varies, depending on several criteria such as the surface allocated and the location chosen,” say Cosmote officials.

Cosmote Romania made total revenues of EUR 423 million in 2009, posting a 36.1 percent growth year-on-year. The operator’s total customer base reached 6.9 million at the end of 2009, up over 17 percent on an annual basis, with approximately 19 percent post-paid. The company gained 1 million new customers in 2009.

Romtelecom, the other company owned by OTE group with a presence in Romania, is currently “testing new ways of selling its products in this period. Last year, the company opened three kiosks to promote its services in commercial centers in Bucharest and Cluj,” say Romtelecom officials.

Only recently, Romtelecom, the largest landline operator on the local market, launched a concept store in the Vitan area. The store was designed to standards applied at Deutsche Telekom. Yorgos Ioannidis, general manager of Romtelecom, also announced at that time that this month Romtelecom would have four such stores opened, two in Bucharest, one in Constanta and one in Braila.

The largest of the four stores are those in Constanta and Vitan, Bucharest, each with a surface of 100 sqm. The other two shops, in Braila and Bucharest-Berceni, have a smaller surface of approximately 50-60 sqm. Romtelecom put a total investment of several hundreds of thousands of EUR into all these outlets. “Over the next months we will monitor the activity and the results of the new stores and decide whether we will expand this concept to other Romtelecom points of presence and the pace at which this will be done,” say Romtelecom officials.

Romtelecom, the largest landline operator in Romania, posted revenues of EUR 807.7 million last year, a 7.2 percent slide from the EUR 869.9 million it made in 2008. The company increased its total number of revenue-generating units by 4.1 percent compared to the end of 2008, over 4.4 million versus fewer than 4.3 million.

Elsewhere, UPC Romania currently owns 15 stores at a national level, all under the UPC brand. Already, the firm has launched a new concept store. The first shop with the new design was opened on January 27 on Bucharest’s Mihai Bravu Boulevard, while the concept will be applied to other cities in the country.

The company prefers to open stores in street locations rather than commercial centers, according to Edward Florescu, deputy director of retail sales at UPC Romania. This year UPC aims to open more shops under the new concept in several cities including three in Bucharest, while further stores will be opened, also in Ploiesti, Timisoara, Cluj, Bacau and Galati. “In some cities, we are talking about already existing locations that we want to better illuminate, while in other cities, we are looking for new locations,” says Florescu.

So UPC will work in two directions: in big cities the company will totally change its stores and in the important cities its shops will undergo major improvements in the current design. “This year we plan to make modernizations in a large number of cities, especially in the ones where we have digital television,” says Florescu.

The opening of the first UPC concept store on Mihai Bravu Boulevard required an investment of approximately EUR 200,000. The 130-sqm store allows visitors to interact with the products, as part of the ‘demo’ area where the company’s newest products and services, such as DVR, HD and WiFi, can be tested. “Clients have at their disposal touch screens through which they can access the information they need alone, this being a first step towards the implementation of self-care services,” he says.

“As far as the revamping of the other stores over the course of this year, the investment in each location will not reach the same sum, because firstly we have the new concept already created and secondly the surface of the stores will be smaller,” says Florescu.

This process of concept store expansion will be accompanied by the modernization and revamping of the company’s entire network of customer relations centers. “This new approach at the level of the customer relations centers is a natural continuation of changes inaugurated by UPC two years ago which had the aim of getting closer to the customer (in a customer centric approach). The change started internally and continued on an external level, materializing into a series of measures meant to increase customer loyalty and their degree of satisfaction,” said Florescu.

UPC Romania posted revenues of EUR 123.4 million in 2009, as shown by the financial report of Liberty Global. At the end of 2009, UPC had 1,249,000 customers, which corresponds to 1,668,000 revenue generating units (RGUs). By comparison, at the end of the previous year the company had 1,263,000 customers which is the equivalent of 1,625,000 RGUs.

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