Cellphone Companies Need to Revisit Retail Strategy

The Wall Street Journal published an interesting article on retail stores owned by cell phone wireless carrier companies. Radio Shack has over 4,500 stores and Verizon Wireless has 2,300 locations " With growth shifting from new subscribers to extracting more revenue from existing customers, there is less and less justification for carriers to operate vast networks of stores." The article states that a retail strategy made sense when the goal was to sign up new subscribers but their market goals have changed. Customers still want to come into a retail location to upgrade their phones or looking at newer smartphone technology. But this trend will not last forever.

The costs required to maintain thousands of retail locations is daunting. As reported in the WSJ article, " Dan Hays, a partner with consulting firm PRTM, estimates major carriers' retail stores cost about $500,000 a year to operate each. For AT&T and Verizon Wireless, that adds up to about $1.1 billion annually or 1.7% of 2009 revenue for Verizon Wireless, for instance."

Reducing Retail Locations Greatly Improves Bottom Line

During the divestiture of the Bell Companies- Bell Atlantic found itself with what seemed like a no- win scenario. They had to close or sublease forty branch locations quickly. With cash reserves dwindling, subleasing was no longer an option. David Worrell, Director of Real Estate/Finance of a Bell Atlantic subsidiary, developed a new concept- Negotiated Lease Buyout of Real Estate Leases. Using this strategy he was able to end all of their lease obligations in seven months with an average savings of 68% per lease. He left Bell Atlantic to form Cambridge Consulting Group to help other companies achieve similar results. Cambridge Consulting Group has helped major organizations including Bank Of America, Ford Motor Credit and Key Corp save millions of dollars on their un-needed commercial real estate costs. For more information please visit his website at www.ccgiweb.com.