Edition #23: Who Tops the UK Telco Retail Rankings: EE, Vodafone, O2, or Three?

As someone whose been a telco retail consultant for many years, I always find it interesting to evaluate the main telcos’ experiences when I’m in a particular country. I’ve done a few of these over the years, and they’ve always been very popular – Greece was my last one - so, where am I off to now?

You may have gathered from the title that this time, I’m actually keeping my evaluation close to home – The United Kingdom! I was a big part of the telco industry in the UK some time ago. It feels like it’s been a lifetime, but I certainly have walked the walk in this market.

In this edition of Telco Talk, I evaluate how EE, Vodafone, O2 and Three stack up, and where I think they have improvements to make.

The State of Retail In The UK

The UK has seen a number of commercial challenges over the past decade, however according to the Office for National Statistics, we still remain around 2.7% below pre-pandemic levels of retail spending in overall volume.

Retail has seen a number of challenges, not least the rise in online sales, now expected to reach 37.5% by the end of 2024 according to Investing Strategy.

When it comes to telecom retail stores in the UK, there’s a striking mix of outdated designs, innovative approaches, and opportunities for improvement. In my recent exploration of the retail spaces of EE, Vodafone, O2, and Three, I uncovered a variety of findings that reflect the broader state of the UK telecom market. Here’s a detailed look at what I found.

EE Retail: Standing out from the crowd - a blend of modernity and functionality

EE stands out among its peers with its new store designs, particularly those newly announced in Gateshead and Bristol. The company has embraced a gaming-heavy concept that not only attracts a younger demographic, but also drives footfall and engagement – I wrote all about it in a past edition. This focus on gaming and modular seating arrangements allows for impromptu conversations and a more relaxed atmosphere.

Key Highlights

• Modern Store Design: EE’s stores are visually appealing with a flexible layout that supports various customer interactions. However, this is in its early stages, and needs to be rolled out far and wide quickly, as the older design is very “me-too” and has a lot of the same pitfalls as the competition.
• Digital Tools: Their investment in queuing and greeting systems, as well as a tablet POS, enhances the customer experience.
• Customer Engagement: The themed areas, such as gaming zones, provide a unique selling proposition and encourage longer dwell times.
• Environmental Efforts: EE’s initiative to reduce paper usage is commendable, though more can be done to completely digitize their processes.

Areas for Improvement

• Discussion Feedback: They have a very scrappy “manual deal sheet” that is often just a series of notes and scribbles, with no way to capture data to enable follow ups.
• Omnichannel Integration: There’s a need for better integration of digital and physical channels to streamline customer journeys.
• Staff Training: EE could further boost customer satisfaction by enhancing staff training programs to focus on advanced sales skills and cross-selling.

Vodafone Retail: Do they know it’s 2024? A struggle with outdated practices

Vodafone’s retail stores are in dire need of modernization. With a design dating all the way back to 2010, these stores feel stagnant and lack the vibrancy needed to attract and retain customers. Their heavy reliance on fixed PCs and manual processes makes the shopping experience cumbersome.

Key Issues

• Store Design: Their stores are modular but dull, lacking any significant digital experience or engagement.
• Franchise Model: Their high number of franchised stores leads to inconsistency in customer service and store appearance (Read about my firsthand experience for a poignant example).
• Customer Interaction: The transactional nature of staff interactions and the absence of welcoming waiting areas detract from the customer experience.

Potential Solutions

• Store Redesign: Vodafone should immediately invest in a store redesign project to create a more inviting and engaging environment.
• Digital Transformation: By implementing tablets for transactions and reducing their paper usage, Vodafone could streamline their processes and enhance efficiency.
• Staff Training and Branding: Vodafone could quickly improve their brand perception by redesigning their staff uniforms and training them to provide a warmer, more personalized service.

O2 Retail: Have they been distracted by the Virgin Media merger? Are they “caught in transition”?

O2’s retail stores reflect a company in transition, attempting to balance between its traditional mobile offerings and newer ventures, like fixed-line services through its partnership with Virgin Media. However, the stores still feel overly focused on mobile and are missing opportunities to promote a more integrated service offering.

Strengths

• Knowledgeable Staff: Employees are well-versed in the benefits of O2’s services, though interactions can be overly transactional.
• Product Range: The stores offer a good assortment of products and accessories, though they lack excitement and engagement.

Challenges

• Store Design: O2’s fixed terminals are at either high or low desks, which makes the store feel outdated and transactional.
• SME Services: The inability to transact SME or B2B services in-store represents a missed opportunity, especially given the large number of small businesses in the UK.
• Customer Experience: The lack of sound and visual engagement in stores results in a cold and uninviting atmosphere.

Three Retail: In need of a refresh

Three’s retail stores suffer from an outdated design and a lack of warmth. The overuse of embedded TV screens, combined with an ineffective use of space, makes for a less-than-ideal shopping experience. However, the staff at Three’s stores are enthusiastic and knowledgeable, which helps offset some of the design shortcomings.

Observations

• Store Design: Three’s stores feel like relics from the 2000s, with fixed desk stations and an over-reliance on round furniture.
• Staff Engagement: Despite their store design flaws, Three’s staff are very engaging and eager to help customers, providing a friendly face for the brand.
• Product Presentation: There’s limited storytelling in how products are displayed, with a focus on mobile and little promotion of broadband or other services.

Recommendations

• Modernizing Stores: A significant redesign is needed to make the stores more inviting and to encourage customer dwell time.
• Enhanced Product Promotion: Better promotion of broadband and IoT products could help drive sales and differentiate the brand.
• Digital Integration: Utilizing tablets more effectively and moving away from fixed stations could enhance the shopping experience.

Ranking The UK’s Big Four Telcos

The UK telecom retail market is characterized by a mix of innovation and stagnation. EE leads the pack with its modern store designs and focus on gaming, while Vodafone and Three struggle with outdated layouts and a lack of engagement. O2 sits somewhere in the middle, making strides but still falling short in integrating its service offerings.

As a telco consultant for Maplewave, I frequently use our Benchmark Telco Retail Assessment to score all areas of a telco’s physical retail experience, spanning store layout & experience, product & IT capability, and people & processes. I used this same tool to quantify my observations and score and rank each of the four UK telcos. Here is what I found.

Market Ranking

• EE – 72%: With its modern design and innovative customer engagement strategies, EE sets the benchmark for telecom retail in the UK.
• O2 – 58%: Despite its transactional feel, O2’s knowledgeable staff and product range keep it competitive.
• Vodafone – 39%: An urgent need for modernization and better customer engagement strategies.
• Three – 39%: Friendly staff but hampered by outdated store designs and limited product promotion.

Conclusion

If I had to give an overall grade to the UK market as a whole, I’d give them a “D - Must Do Better”.

Visiting the UK’s telecom retail stores provided a fascinating insight into how each brand approaches customer engagement and store design. While EE’s forward-thinking approach sets them apart, there is significant room for improvement across all brands.

By embracing modern retail practices, enhancing digital integration, and focusing on customer experience, these telecom giants can better meet the needs of today’s consumers and remain competitive in an evolving market.

As it stands right now, they are mainly very old-fashioned, and have not driven much innovation at all, with the exception of EE’s new concept - which is excellent. Vodafone and Three are clearly waiting for their merger to go through, which should see them re-invest after benefitting from economies of scale. VM/O2 should be at this space right now, but a poorly thought through concept sees them mobile heavy, and they are not leveraging the energy that a superb fixed/cable offering like Virgin Media can bring.

I see SO MUCH MORE innovation in other countries of the world, with some Canadian, European and Asian telcos trumping what should be one of the most innovative and profitable markets in the world.

Come on my fellow country-people – DO MORE!

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