Few people look forward to their visits to retail stores run by their wireless carrier. Every two years, they stop in to get a discounted phone in exchange for a contract, and unless the screen cracks a year in, that’s about it. The stores generally don’t encourage hanging out; most don’t offer seating unless you’re next to a sales terminal. Now Verizon Wireless, the largest U.S. carrier, is trying to remake its retailers as rec rooms for tech geeks, giving them a place to spend idle hours playing with RC cars or digital DJ equipment.
On Nov. 19, Verizon Wireless opened a 9,715-square-foot “destination store” at the Mall of America in Bloomington, Minn. The company says it plans to open several similar outlets and is also starting to remodel more than 1,700 existing stores across the country, replacing cash registers with tablets and grouping products into departments, such as fitness gadgets and music accessories. Dead center in the new layouts are common spaces where employees offer tutorials. The one thing that’s harder to find in the redesigned Verizon store is a phone. At a remodeled outlet in Bridgewater, N.J., they’re relegated to a wall in the back. “They’re like milk in the back of the grocery store. You know they’re there,” says store manager Filip Olkowski.
As growth in the number of new U.S. wireless users slows, Verizon is looking to wring more revenue out of existing customers. For carriers, accessories such as cases mean higher profit margins than the phones they subsidize. Verizon is also profiting from rising data use on its LTE network, and every set of Bluetooth speakers sold can yield higher monthly bills for its customers. “We want to talk to them about all the ways they can use their devices,” says Marni Walden, the company’s chief operating officer. Walden says Verizon Wireless expects the redesign to increase sales, the number of wireless devices each customer uses, and average revenue per user, though she declined to specify numbers.
Carriers are becoming harder pressed to distinguish themselves from one another, as exclusive deals with phonemakers become rare and most hardware companies no longer pay carriers to market their products in stores. For now, Verizon’s advantage is the size and strength of its network, but that won’t last much longer, says Chetan Sharma, an independent mobile-industry consultant in Issaquah, Wash. “Within a matter of 18 to 24 months, the differences between the various networks will go to zero,” Sharma says. “There will be some quibbling about who is faster, but basically they’ll all be the same.”
While smaller competitors such as T-Mobile (TMUS) want to compete on price, Verizon is betting that the explosion of connected devices has created an opening for it to serve as a sort of guide for wireless consumers. “We think in the world of retail and technology there hasn’t been a very good conversation between brands and shoppers,” says Jay Highland, vice president of Chute Gerdeman, the branding firm that worked with Verizon Wireless on its new retail strategy. He bristles at the suggestion that he got the idea from Apple (AAPL), whose fantastically successful retail stores have served a similar role for years.
At the Bridgewater Verizon store on a recent Wednesday, customers lingered, with small groups sitting down at a table near a large flatscreen to take an hourlong class walking them through their smartphones’ features. Beverly Petrallia, a manager at a nearby trucking company, learned about the class when she called with a question about her bill. She left knowing how to move files she needed from her phone to her PC but says she doesn’t want to change the way she usually interacts with Verizon. “If I have a problem, they fix it,” she says, “and I don’t come back for another year.”